What will happen to my irrevocable trust if I file personal bankruptcy? 9 Answers as of March 08, 2011

If I file a personal chapter 7 bankruptcy, will the court consider my inherited irrevocable trust as an asset and take it to satisfy my creditors?

Ask a Local Attorney. 100% Anonymous. Free Answers.

Free Case Evaluation by a Local Lawyer: Click here
David R. Fondren, Attorney at Law
David R. Fondren, Attorney at Law | David R. Fondren
A lot will depend on the language of the trust itself and the terms of when it is payable to you, who set up the trust, who is the trustee, who else is a beneficiary. If there is a spendthrift clause, it could very well be outside the estate and not part of it. You need an attorney to review the actual language. No way to tell from here. The look back period for self administered trusts is 10 years.
Answer Applies to: Missouri
Replied: 3/8/2011
Law Offices of Dennis Baranowski
Law Offices of Dennis Baranowski | Dennis Baranowski
In most cases, a well drafted irrevocable trust more than likely will not be touched in a Chapter 7 bankruptcy. However, depending on the terms of the trust and the circumstances in which the trust was created, the Chapter 7 trustee may be able to treat the trust as an asset of the bankruptcy estate. You should consult with an experienced bankruptcy attorney to review your specific circumstances, including the irrevocable trust, in order to determine whether the trust will be protected from the Chapter 7 trustee.
Answer Applies to: California
Replied: 3/6/2011
William C. Gosnell, Attorney at Law
William C. Gosnell, Attorney at Law | William C. Gosnell
Yes you will lose it to the trustee.
Answer Applies to: Tennessee
Replied: 3/4/2011
Gus Johnson Attorney at Law
Gus Johnson Attorney at Law | Gus Johnson
Probably would not be part of your bankruptcy if it was properly drafted.
Answer Applies to: South Dakota
Replied: 3/4/2011
Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
You need see a bankruptcy lawyer. Bring a copy of the trust to your first visit.
Answer Applies to: California
Replied: 3/4/2011
    Carballo Law Offices
    Carballo Law Offices | Tony E. Carballo
    You cannot "inherit" an irrevocable trust. Maybe you mean someone, such as your parents, created such a trust and named you as beneficiary. In that case the trust is an asset of yours because it is irrevocable. Determining the value of the trust is not easy if someone else, such as your parents for example, have the right to possess and enjoy the assets of the trust while alive or for a period of years. If the trust property is all yours now without restrictions then the property can definitely be sold to pay your debts unless you can exempt the property. You need to obtain legal representation to handle your bankruptcy case and may need to consult with the attorney who drafted the trust or another lawyer who handles trusts and estates.
    Answer Applies to: California
    Replied: 3/4/2011
    Ferguson & Ferguson
    Ferguson & Ferguson | Randy W. Ferguson
    If you have put money in trust in last ten years there is a problem if you file bankruptcy.

    The information provided on this website is for general information purposes only. The attorney is licensed in the State of Alabama. No answers or information on this site should be taken as legal advice for any individual case or situation. This information does not create an attorney-client relationship.
    Answer Applies to: Alabama
    Replied: 3/4/2011
    The Law Office of Mark J. Markus
    The Law Office of Mark J. Markus | Mark Markus
    Is this a trust you created, or one in which you are a beneficiary? If you are a beneficiary, then yes it is definitely an asset which could be taken in a Chapter 7 case unless you have sufficient exemptions under applicable state law to protect it. Exemption laws are based on the state where you resided for the 2 years prior to filing your bankruptcy case or, if you lived in more than 1 state during that period, in the state where you resided for the greater part of the 180 days prior to that 2 year period.
    Answer Applies to: California
    Replied: 3/3/2011
    Diefer Law Group, P.C.
    Diefer Law Group, P.C. | Abel Fernandez
    Yes, if you have already received the inheritance.
    Answer Applies to: California
    Replied: 3/3/2011
Click to View More Answers: