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How can I protect assets my son will inherit from me when I die if he files bankruptcy before I die?

Grayling, MI |

He has a large medical bill because the insurance won't pay on an attempted suicide and he has mentioned filing bankruptcy. I have everything in my will left to him including a house which still has a mortgage. I do not want him to have it all taken from him by them forcing him to sell the house or something. Seems there must be a way I can do it?

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Attorney answers 6

Posted

Unless you expect to die yourself in the near future, you may be needlessly worrying. In order for the bankruptcy court to take away anything left to him in your will, you would have to die within 180 days of your son filing his bankruptcy. Meeting with an experienced estate planning attorney is always a good idea. Worrying for no real reason just shortens your enjoyment of life. Hope this perspective helps!

Asker

Posted

That makes me feel better and I will discuss it with the attorney who drew up the will. Thank you very much.

Asker

Posted

So, the creditors mentioned in the bankruptcy cannot make him sell my house he has inherited, if I die at least 6 months after his bankruptcy is first filed?

Dorothy G Bunce

Dorothy G Bunce

Posted

Yep, because until you die he has absolutely no interest in your property...unless you foolishly put him on the deed!

Asker

Posted

Thank you...

Dorothy G Bunce

Dorothy G Bunce

Posted

Live long and prosper!

Asker

Posted

Ditto!

Posted

You need to meet with an estate planning attorney to set up so your assets are held in a trust for your son after your death containing appropriate spend thrift provisions.

The general advice above does not constitute an attorney-client relationship: you haven't hired me or my firm or given me confidential information by posting on this public forum, and my answer on this public forum does not constitute attorney-client advice. IRS Circular 230 Disclosure: In order to comply with requirements imposed by the Internal Revenue Service, we inform you that any U.S. tax advice contained in this communication (including any attachments) is not intended to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein. While I am licensed to practice in New York and California, I do not actively practice in New York. Regardless, nothing said should be deemed an opinion of law of any state. All readers need to do their own research or pay an attorney for a legal opinion if one is necessary or desired.

Asker

Posted

Thank you for your input.

Posted

There are several ways you can do this. Spend thrift trust is one way. You need to talk to an attorney who can advise you the right way to go in your particular situation.

Asker

Posted

I presently have a ladybird will. Can you briefly tell me what a spend thrift trust is?

David B. Carter Jr.

David B. Carter Jr.

Posted

A spendthrift provision creates an irrevocable trust preventing creditors from attaching the interest of the beneficiary in the trust before that interest (cash or property) is actually distributed to him or her.

Dorothy G Bunce

Dorothy G Bunce

Posted

A spendthrift trust is a trust that has "magic words." It can be as simple as using the magic words appropriately when creating the trust.

Posted

I agree with my colleagues. A trust seems to be the best option for you, but you need to be careful. The trust should be set up by an attorney to make sure it is done properly. If your son is given too much control, any creditors he has may also be able to reach the trust assets. You also should discuss with your attorney the effect of a bankruptcy, if it occurs. The bankruptcy proceeding may actually wipe out your son's debts.

There appear to be other issues involved, however, (as there frequently are). You need to discuss these with the attorney to determine how best to proceed.

James Frederick

***Please be sure to mark if you find the answer "helpful" or a "best" answer. Thank you! I hope this helps. ***************************************** LEGAL DISCLAIMER I am licensed to practice law in the State of Michigan and have offices in Wayne and Ingham Counties. My practice is focused in the areas of estate planning and probate administration. I am ethically required to state that the above answer does not create an attorney/client relationship. These responses should be considered general legal education and are intended to provide general information about the question asked. Frequently, the question does not include important facts that, if known, could significantly change the answer. Information provided on this site should not be used as a substitute for competent legal advice from a licensed attorney that practices in your state. The law changes frequently and varies from state to state. If I refer to your state's laws, you should not rely on what I say; I just did a quick Internet search and found something that looked relevant that I hoped you would find helpful. You should verify and confirm any information provided with an attorney licensed in your state. I hope you our answer helpful!

Asker

Posted

Thank you. Yes, that all makes sense and I will bring it up to the attorney who drew up the Ladybird Will.

James P. Frederick

James P. Frederick

Posted

It sounds like you mean ladybird deed. There is no such thing as a ladybird Will.

Asker

Posted

Oh, ok thank you. I did take the deed to the county building to record it.

Posted

He needs to file a chapter 7 and you need to live for about 7 months after he files

Posted

Put it into a trust and have him file the bankruptcy before he receives a dime.

My name is Stephen R. Cohen and have practiced since 1974. I practice in Los Angeles and Orange County, CA. These answers do not create an attorney client relationship. My answers may offend I believe in telling the truth, I use common sense as well as the law. Other state's laws may differ.. There are a lot of really good attorneys on this site, I will do limited appearances which are preparation of court documents it is , less expensive. However generally I believe an attorney is better than none.

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