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How can you file bankruptcy if all your assets and business assets are in a trust for your children?
Wiki User
∙ 8y ago
That's a really complicated situation, and you will definitely want to see an attorney in your area about it since there are lots of little factors that can completely change the outcome.
Generally speaking, one would probably have a tough time filing bankruptcy in that situation if one put the items in the trust within the past 12 months since the Bankruptcy Court might see that as a gift, and the Court can go back and void any gifts to family members or friends (called "insiders" in bankruptcy lingo) that occured within the past 12 months prior to filing the bankruptcy. If the trust was funded more than 12 months ago, one normally doesn't have to report the funding on their bankruptcy petition, but that alone might not end the issue. Some states have fraudulent transfer statutes that prevent one from changing the ownership of assets to protect them from creditors that go back several years, so depending on what state one lives in, one may have problems.
Please note that nothing in this posting or in any other posting constitutes legal advice; this is simply my understanding of the facts, which I do not warrant, and I am not suggesting any course of action or inaction to any person.
Wiki User
∙ 8y ago
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Is property held in an irrevocable trust protected in bankruptcy?
Can you protect your assets from bankruptcy by placing them in an irrevocable trust?
Can the assets in a revokable living trust be affected by a bankruptcy of the trust holder?
Yes.
Can you have a trust and file for bankruptcy?
You can have a trust and file for bankruptcy but the more important question is whether you should given what is in the trust, who transferred the assets into the trust and who is a beneficiary of the trust. If you have set up a trust and have irrevocably transferred all of your interest to assets to the trust then there may be questions of whether the transfers were proper and allowable under bankruptcy law. If you are a beneficiary of a trust the question becomes whether your beneficial interest in the trust is protected when you file for bankruptcy. This will depend on reviewing the facts of how the trust and reviewing the trust documents.
Can a creditor claim assets held for a beneficiary in trust in case of bankruptcy of the beneficiary?
Not if the trust was properly drafted by a professional.
Can filing bankruptcy affect a living trust?
Yes. If the trust is not a true trust (i.e., the settlor, trustee and beneficiary are all the same person) or if the trust is revocable, the trustee can pursue the trust assets. If the debtor is the beneficiary of a living trust and can or has gotten a distribution of some of the trust assets, the trustee may be able go after the assets to the same extent the debtor is eligible to receive a distribution. It may be possible to negotiate a settlement of less than the full amount of the assets with the trustee.
Who will get the assets of a deceased parents if children are underage and there is no will and testament in state of Florida?
The state will open the estate. The assets will go into a trust for the use of the children. The state will appoint a trustee for the assets and a guardian for the children. They may be the same person.
What is the percent of a trust belongs to spouse when the spouse passed away and has children?
The percentage of the trust that belongs to the surviving spouse when the spouse passes away and has children can vary depending on the terms of the trust. In some cases, the surviving spouse may be entitled to a portion of the trust assets, while the remaining assets may pass to the children. It is important to review the trust documents and consult with an estate planning attorney to determine the specific distribution.
Does a trust created prior to marriage automatically get distributed to spouse not included in trust?
Generally, no. In fact, a properly drafted trust protects the assets of the trustor from their spouse. That type of arrangement is often used when a person has valuable assets, children from a first marriage and a new spouse. A trust removes the assets from their individual estate thereby circumventing inheritance laws.
What does it mean that you cannot get the assets back in a revocable trust?
You CAN get the assets back in a revocable trust. You CANNOT get the assets back in an irrevocable trust. An irrevocable trust cannot be terminated by the settler once it has been created. The settler transfers their assets into the trust and no longer has any rights of ownership in that property or the trust. The main reasons for setting up an irrevocable trust are estate planning and tax purposes. Generally, assets in an irrevocable trust are shielded from creditors.
Does SPA Trust asset protection work in bankruptcy?
It can, provided the trust is written properly and, often more important, the transfer of property to the trust is not able to be considered a fraudulent transfer. You should consult an attorney to see if it would work for you, because everyone's facts are different. Todd H's experience: "I put a home in a SPA Trust a couple years ago and recently went through a business and personal bankruptcy. We disclosed everything to the bankruptcy judge and he said it was perfectly legal and a SPA Trust is not included in bankruptcy. I still have a home to show for it."
Does a trust protect personal assets?
Yes. However, the assets must be transferred to the trust and will no longer be "personal" assets. They will be under the control of the trustee of the trust. You should discuss your situation with an attorney who specializes in trust law in your state.
Can same assets be left in a will and a trust?
If the deceased's will leaves assets to a person but places them into a "trust" for that person, yes, they can.
