During the Chapter 7 bankruptcy process, you will need to relinquish some assets to the bankruptcy trustee so they can be sold or liquidated and your creditors can be repaid, and you may be wondering how Chapter 7 will affect you if you are the beneficiary (or “successor trustee”) of a revocable trust.
In a revocable trust, you, as the trust beneficiary, do not immediately control the assets in question but are rather waiting to receive them; this is common when the trust’s creator passes away and the beneficiary may then take control of the assets. The creator/grantor of a revocable trust maintains full control of the assets until his/her death, so these assets cannot be considered part of a debtor’s bankruptcy estate.However, when the trust’s creator/grantor passes away, the trust becomes part of the beneficiary’s assets and may then be considered an asset in a bankruptcy filing.
If you’re considering filing for bankruptcy and you are a beneficiary or successor trustee for a revocable trust, the assistance of an experienced attorney is essential to determine whether and how your trust can be protected throughout the process until your discharge.
If you are struggling financially and considering filing for bankruptcy, you’re not alone. Contact an experienced bankruptcy attorney today for a free consultation.