As you know, there are few things more important in life than creating a comprehensive estate plan that can protect your assets for generations to come, allowing your family to hold on to those assets and live comfortably for years. While wills are traditionally considered the cornerstone of all successful estate plans, many individuals also choose to create various forms of trusts in their lifetimes as well. That being said, if you are someone that is currently in debt and you have a trust in place, that trust may not be exempt from collection activities. If you or your beneficiaries file for bankruptcy, there is a chance that creditors may seize those assets for a repayment of debts. Please continue reading and speak with our knowledgeable New Jersey estate planning attorney to learn more about trusts and bankruptcy. Here are some of the questions you may have:
How Are Revocable and Irrevocable Trusts Different?
The differences between revocable and irrevocable trusts are critical when it comes to determining whether that trust is protected from filing for bankruptcy. For example, when someone creates a revocable trust, they maintain control over that trust until they pass away. This means that they technically own these assets until they pass. That being said, when someone creates an irrevocable trust, they essentially relinquish those assets to the beneficiaries, even if they do not technically have access to those assets during the grantor’s lifetime. In some cases, you can add a spendthrift provision to your trust which may shield it from credit seizure, should your beneficiary ever file for bankruptcy.
Why Should I Create a Trust?
If you are someone who is looking into creating a trust, you should understand the multiple benefits associated with doing so. Irrevocable trusts often come with the following benefits:
Estate tax reduction
Charitable estate planning
If, however, you are looking into creating a revocable trust, there are a different set of benefits for you and your family. Those benefits are as follows:
They will help you and your family plan for mental disability
They can help you avoid probate
They can protect your privacy until your passing
No matter your situation, if you need assistance through estate planning or bankruptcy matters, you can count on Attorney Velasco.
Contact Our Experienced New Jersey Firm
Juan C. Velasco, Esq. is a trusted attorney who concentrates on bankruptcy, family law, real estate, and estate matters who has been serving the New Jersey area for over 20 years. That is why we are confident we have what it takes to provide you with the effective legal counsel you need. If you need experienced legal counsel, please contact Velasco Law Office and we will be happy to assist you.