My Mom is ill. There is a spendthrift trust in play. If I file chapter 7, technically at this moment I am not entitled to anything. But if, God forbid, she passes during the bankruptcy, would the trustee or creditors be able to access. The trust was set up by her estate planning attorney. My brother decides how much money I get and when.
Yes I have done this many times. If the spendthrift trust is set up properly under your state law, then neither the court nor your creditors can reach it. But find an experienced bankruptcy attorney and review it with them prior to your filing.
I am not your attorney unless you and I have signed a retainer agreement. What I am saying is not legal advice. Do not act on this information without engaging my services, this is for consideration only.
The bankruptcy system looks at your assets and a valid spendthrift trust can mean the assets of the trust are not yours. You need to be VERY careful and hire a lawyer with expertise in both trusts and bankruptcy. If the system were to invalidate the trust the money could be taken to pay your creditors. Again, be very careful.
Law Office of Michael J. Primus We are a debt relief agency and help people file for bankruptcy under the bankruptcy laws. We have offices in California only.
I'm sorry to hear about all of the things you are going through. As far as trusts are concerned, there can be many variables depending on the wording of the trust itself. Generally, though, if you are not entitled to the money, it will not be part of your "bankruptcy estate," and therefore not taken to pay creditors. That would change, however, if your mother passed away within 180 days of the filing of your bankruptcy. If you became entitled to an inheritance during that 180 day time period, it could be taken to pay your creditors. These issues are complex, and I would highly recommend that you set up one or more consultations with local bankruptcy attorneys to discuss all of your options in light of the entirety of your financial situation. Most bankruptcy attorneys offer free consultations. Best of luck to you.
This is general information, based on limited facts, and does not constitute legal advice or the forming of an attorney-client relationship. If you want legal advice for your particular situation, you should contact a local attorney who can counsel you regarding your particular situation. Mr. Waddell is a bankruptcy attorney who helps people file bankruptcy and is designated as a debt relief agent under federal law.
"Properly set up" the bankrutcy trusee will carefully examine the document and look for flaws.
On her passing it is unclear as to whether you receive te funds or if it remains in trust.
'SEE a lawyer. I understand that CA has one or two. Do not guess.
Agree with colleagues. Have the trust reviewed by the bankruptcy attorney. If you become entitled to a distribution under a trust within 180 days of filing, that distrubution becomes an asset of the estate.
California statues do permit a Trustee to reach up to 25% of the amount in the spendthrift trust to satisfy claims, BUT there has to be enough left in the trust to meet your current and future financial needs. It is a lot of work and legal expense for the Trustee to get to the money. In my experience they will negotiate a lesser amount or pass on it all together. This also assumes that the trust was created and administered under the laws of the state of California. In most other states, spendthrift trusts are 100% exempt.
Mr. Firth has wacked the nail right on the head. 25% of the trust allocated to you could be subject to administration if the trust is irrevocable or Mom passed within 180 days of filing. The 25% is based on California Law. If the trust was established under the laws of another state, then there's a good chance nothing is subject to administration.
You should consult with an experienced bankruptcy lawyer "in person" before doing anything.
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