As of January 1, 2025, California’s Assembly Bill 2837 officially went into effect, bringing notable changes to how retirement plans are treated under state law. Specifically targeting Private Retirement Plans (PRPs) and Individual Retirement Accounts (IRAs), the bill imposes tighter reporting rules and greater scrutiny on contributions made in the shadow of litigation. For business owners and high-net-worth individuals, this new legal framework adds nuances to retirement planning and necessitates a fresh conversation with an experienced asset protection lawyer.
While PRPs have long offered a safe harbor for wealth preservation, especially in professions vulnerable to lawsuits, AB 2837 now limits how these vehicles can be used. By focusing on timing and intent, the law aims to prevent last-minute transfers designed solely to shield assets during active or anticipated legal disputes.
Retirement Contributions Now Face Legal Crosshairs
One of the core components of AB 2837 is its emphasis on intent and proximity to legal action. Contributions to PRPs or IRAs made in anticipation of a lawsuit, or after one has begun, will face heightened review. Courts and regulators now have a clearer path to challenge such contributions, making it riskier to rely on retirement plans as post-crisis shelters.
High-income professionals and small business owners who previously used PRPs as part of their litigation defense strategy must now weigh the potential exposure these plans might bring. Even when contributions appear compliant on the surface, the timing alone may draw regulatory attention.
Why High-Net-Worth Individuals Must Act Now
For California’s high-net-worth residents, asset protection has never been a one-size-fits-all solution. AB 2837 reinforces that reality. Relying on outdated strategies or assuming past protections still apply may leave businesses exposed to unforeseen legal and tax risks.
Now is the time for clients and their advisors to revisit asset protection structures. Strategies such as irrevocable trusts, business entity restructuring, and diversified estate planning tools should be evaluated alongside PRPs and IRAs. Collaboration among legal, tax, and financial professionals will be fundamental to building protection plans that align with the latest regulatory requirements.
Turning Compliance Pressure Into Strategic Advantage
The broader takeaway from AB 2837 is that state-level changes can quickly alter how traditional asset protection methods function. With California acting as a bellwether for regulatory shifts, professionals in other states would be wise to pay attention. It’s increasingly clear that transparency and proactive planning are favored over reactive asset shifting.
Legal teams working with business clients should consider offering updated compliance assessments and retirement planning audits in light of this legislation. Doing so not only helps preserve client trust but also positions firms as forward-thinking advisors amid ongoing reform.
Turning Legislative Shifts Into Leadership Moments
Asset protection is a moving target, and staying current with legislation like AB 2837 is part of responsible long-term planning. As high-net-worth clients and corporate professionals seek guidance in this evolving space, your insights can offer real value. Consider listing your practice with Estate Planning Pros to expand your visibility among other forward-thinking advisors and firms. Sometimes, the most powerful step is simply being part of the right conversation.