I have done what the banks were forced to do with living wills that required banks to have a plan to orderly dissolve in the event of catastrophe. I researched bankruptcy and how best to protect my assets from it.

401Ks and IRAs are protected from bankruptcy so the majority of my future is protected. The homestead exemption varies by state and my state gives me a certain dollar value of protection on my primary residence.

All cash obviously is gone in a bankruptcy (chapter 7 or 13). If you expect to have a significant judgement against you or are unable to pay a debt, you don’t file for bankruptcy right away. You spend down your money. Go on the greatest vacations ever and etc. There is a look back period of 90 days for bankruptcy that disallows all non essential expenditures. If you were sued and you start spending abnormally high during the period of time you knew there was a case against you, the plaintiff might argue you were depleting your assets (your judgement or debt could be excluded from the bankruptcy if this is the case). It depends on the situation. It’s less of a problem if you owe a bank and spent money for a year while paying the minimums and then defaulting.

one way to protect yourself is to keep a financial separation of some assets between spouses. Your spouse can’t be sued for assets in her name if you are sued unless you live in a community property state. Given that a lot of people aren’t devout Christians (don’t save themselves for marriage and stick with the spouse for life), some might be concerned about this. However, if you have kids with the spouse and the spouse loves her kids, assets in her name will go to your kids in the end which is the concern anyway (everything is about your kids).

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another way is to give your kids 30K each year (both spouses) as gifts. Get assets in their name every year with this and over a course of 20 years it adds up and provides protection if you are sued.