The California Private Retirement Trust

What is a Private Retirement Trust (PRT)?

A Private Retirement Trust (PRT) is a non-qualified retirement plan designed to exempt your assets from creditors while offering maximum flexibility and control over your retirement funds. Governed by California state law, a PRT is specifically tailored for individuals who want to preserve their wealth and keep it safe from lawsuits, bankruptcy, or other creditor claims. Unlike traditional qualified plans like 401(k)s and IRAs, a PRT is not subject to ERISA, allowing for more robust asset protection.

PRT: An Exemption, Not Just an Asset Protection Strategy

• Exemption from Creditors: When an asset is classified as exempt, it is completely off-limits to creditors, meaning they cannot access or seize the asset under any circumstances, even in cases of bankruptcy or judgments. A California Private Retirement Trust is an exempt asset under California law, which means the funds placed in a PRT are fully protected, regardless of legal or financial challenges.
• Asset Protection Strategy: General asset protection strategies aim to reduce the risk of creditors accessing your assets. These strategies typically involve creating legal barriers that make it more difficult for creditors to claim assets, such as through LLCs, offshore trusts, or other structures. However, these methods don’t offer the same guaranteed protection as an exemption. Creditors may still challenge these strategies in court, leading to the potential seizure of assets if the structure is deemed ineffective or pierced by legal arguments.

In contrast, a PRT offers a stronger and more definitive layer of security because it places assets in a category that is legally exempt from creditor claims. This legal exemption is far more secure than general asset protection strategies, which may be more vulnerable to court rulings or legal challenges.

Key Benefits of a California PRT

1. Comprehensive Creditor ExemptionOne of the most significant advantages of a PRT is its full exemption from creditors. Whether you’re facing personal or business liabilities, assets placed in a PRT are completely shielded from being claimed by creditors. This level of protection is far greater than what is currently available through traditional qualified plans, which are now more vulnerable under California law.
2. Maximum FlexibilityPRTs offer far more flexibility than qualified retirement plans. There are no contribution limits, early withdrawal penalties, or mandatory distribution requirements. This allows you to manage your retirement funds in a way that suits your personal financial goals, without the rigid rules imposed by qualified plans like IRAs or 401(k)s.
3. Complete Control Over Your AssetsUnlike a traditional retirement plan, where the assets are often tied up until retirement age, a PRT allows you to retain control over your investments. You decide how much to contribute, when to withdraw, and how to allocate the funds. With a PRT, you are in the driver’s seat of your financial future.
4. Multi-Generational Wealth PreservationA PRT is not just a tool for your retirement—it’s also a powerful way to preserve wealth for future generations. Since assets held in a PRT are not subject to mandatory withdrawals, they can continue to grow tax-deferred, remaining protected for your heirs. This makes it an ideal instrument for long-term wealth preservation and estate planning.
5.  Protection Not Dependent on EmploymentUnlike 401(k) plans and pensions, which are often tied to your employment, a PRT offers protection independent of your job. This means you can continue to contribute to and benefit from your PRT even if you change jobs, retire early, or pursue other ventures.

Who Qualifies for a California Private Retirement Trust (PRT)?

A California Private Retirement Trust (PRT) is a powerful asset protection tool, but it is best suited for individuals who meet specific financial criteria. If you are considering a PRT, it’s important to determine whether this strategy aligns with your financial situation and retirement goals.

Here are the typical qualifications for individuals who may benefit most from establishing a PRT:

1. Net Worth of $5 Million or MoreA PRT is designed for individuals with significant assets to protect. If you have a net worth of $5 million or more, a PRT can provide you with robust creditor protection, helping you preserve your wealth and minimize risk. This makes it a valuable tool for high-net-worth individuals concerned about potential lawsuits, business liabilities, or other financial risks.
2. Annual Adjusted Gross Income (AGI) of $500,000 or MoreThose with an annual AGI of $500,000 or higher are typically in a financial position to take full advantage of a PRT. With flexible contribution options and no limits like those imposed on qualified retirement accounts, a PRT allows you to strategically allocate funds to protect your wealth and maximize your financial planning.
3. A 5-Year Horizon to RetirementA PRT is an excellent fit for individuals who are approximately five years away from retirement. This time frame allows you to strategically contribute to and manage the trust, building a strong financial foundation before retirement. With its flexibility and control over assets, a PRT ensures that your wealth is both protected and available when you need it most in retirement.

Why Now is the Time to Consider a PRT

Recent changes to California law have significantly reduced the protections for qualified retirement accounts, making it easier for creditors to access funds in accounts like IRAs and 401(k)s. In this new environment, a California Private Retirement Trust offers a much safer alternative for protecting your wealth. With the potential for lawsuits, business risks, or personal liabilities, it’s more important than ever to secure your assets in a structure that will keep them out of reach from creditors.

Consult with Legal Experts to Set Up Your PRT

Setting up a PRT requires careful legal planning to ensure it complies with California law and maximizes asset protection. Our team of experienced attorneys specializes in asset protection and retirement planning. We will work with you to create a customized PRT that fits your financial needs and protects your wealth from creditor claims.

Start Protecting Your Assets Today

Don’t leave your financial future to chance. With a California Private Retirement Trust, you can safeguard your retirement assets, maintain full control over your funds, and preserve your wealth for generations to come. Contact us today by filling out the form below for a consultation and learn how a PRT can be the cornerstone of your asset protection strategy.