Most people have not heard of the “Private Retirement Plan”- but having one, may just save your retirement. In California, when someone is sued and a judgment is entered against them, not everything they own is up for grabs. The law protects certain categories of property from creditors. These are known as exempt assets, and they serve a legitimate and important function: allowing individuals to maintain basic financial security—even in the face of legal or financial adversity.
Most Californians are familiar with at least one exemption: the homestead exemption, which protects a portion of equity in your home. But there’s another exemption, less known and often overlooked, that is especially valuable for professionals, business owners, and high earners: the Private Retirement Plan (PRP).
This is not an exotic strategy. It’s not a loophole. It is a state-recognized method of setting aside assets for retirement—assets that are legally exempt from most forms of collection.
And for Muslim families, it offers a rare benefit: retirement protection that preserves both ownership and compliance with the Islamic Rules of Inheritance.
Retirement Accounts Are Already Exempt — This Is the Next Step
If you have a 401(k), IRA, or pension, you’re already benefiting from exemption planning. These accounts are protected by California law because they serve a legitimate social purpose: giving people a way to provide for themselves in old age. But what if those accounts aren’t enough? What if your profession or business generates wealth that doesn’t fit neatly into a retirement wrapper?
California allows you to go a step further. Through a Private Retirement Plan, Amina can create a retirement structure tailored to her needs — one that shelters a broader range of assets, so long as it’s properly documented and genuinely designed for retirement.
Dr. Amina’s Retirement Security
Take Dr. Amina, a 51-year-old neurologist in Los Angeles. She’s had a long and successful career. She runs her own practice, contributes to a SEP-IRA, and has invested in a couple of rental properties over the years. She’s financially comfortable — but increasingly aware of the professional risks she faces. Malpractice insurance provides some coverage, but she knows from colleagues how quickly a lawsuit can spiral beyond what’s covered.
When she brings this up with her estate planning attorney, the conversation doesn’t start with fear or evasion. It starts with retirement.
Together, they talk about what it would take to ensure that her retirement is stable, that her practice doesn’t leave her exposed in her later years, and that her legacy can be passed on properly. That’s when the attorney introduces the idea of a Private Retirement Plan — a state-sanctioned structure that allows her to designate specific assets for her retirement, and in doing so, places them under the protection of California’s exemption laws.
Dr. Amina doesn’t need to give anything away. She still owns her investment accounts and real estate. But now, she holds them under a plan that is governed by a retirement-focused framework. Amina directs plan documents be overseen by her attorney and an administrator tracks contributions and account levels. Retirement goals are articulated.
It is, in every sense, a real plan for retirement — not a shell to hide money. That’s why it works.
The Islamic Rules of Inheritance Still Apply
For Dr. Amina, this was more than just a legal or financial decision. She does not want to disrupt the Islamic Estate planning that she believes must apply when she passes.
In Islam, for purposes of inheritance, ownership matters. What Amina gives away no longer belongs to her estate. This does not replace the living trust or will or powers of attorney.
With a PRP, Dr. Amina retains ownership. The assets remain hers. When she eventually passes, they will be included in her estate and distributed according to the Qur’anic shares — the fara’id — owed to her children, spouse, and other qualifying relatives.
In short, the PRP allowed her to protect her retirement without compromising her religious obligations.
Legal Integrity, Long-Term Security
Several years later, a former employee brings a lawsuit against Dr. Amina’s practice. The case is complicated, and although her attorney is confident she will prevail, there’s always uncertainty. What gives Dr. Amina peace of mind is knowing that the retirement plan she funded and maintained for years is protected — not because of secrecy or manipulation, but because California law explicitly recognizes the value of protecting retirement assets.
Amina established her plan before the lawsuit. The contributions were reasonable and in line with her income. The records are clear. And the purpose — retirement — is genuine.
There’s nothing aggressive about the strategy. It’s simply good planning — the kind that allows a professional to focus on her work today while preparing responsibly for tomorrow.
If you’re a physician, business owner, or high-income professional in California, and you’re thinking about how to protect your retirement while respecting the Islamic obligations of inheritance, a Private Retirement Plan may be one of the strongest tools available to you.
It won’t be the right fit for everyone, especially since the fees for administering them can be quite high (I understand that is a relative term). But when designed intentionally — not as an afterthought, not as a shield, but as a retirement strategy — it offers a powerful way to secure your future and preserve your legacy.
📞 To discuss whether a Private Retirement Plan belongs in your retirement and inheritance strategy, schedule a 15-minute no-obligation confidential consultation.