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How a Living Trust Factors Into Bankruptcy

The Living Trust and Bankruptcy

Many individuals looking at the possibility of filing for bankruptcy have property in what is called a living trust. A living trust is a trust that a grantor puts property into for a trustee to manage for the benefit of the beneficiaries. A living trust can be revocable as the grantor can change his or her mind at any time. The revocable living trust has become a popular estate planning mechanism.

There are complexities and nuances of a living trust that can factor into a bankruptcy proceeding.  If an individual filing for bankruptcy is both the grantor and trustee of a revocable living trust then the property of the trust is considered property of the estate.

If an individual is both the grantor and trustee of a trust that is irrevocable then the property in the trust is not considered part of the bankruptcy estate. An exception is if the bankruptcy court finds that the trust was created to shelter property from creditors.

Determining what is and what is not part of a bankruptcy estate is more complicated than one would first think. Aspects of other fields of law also play an important part in bankruptcy proceedings. Having the right assistance can make a difference in your bankruptcy filing.

Eric Lanigan and Roddy Lanigan of the Orlando law firm Lanigan and Lanigan are experienced in helping clients through the complexities of bankruptcy and foreclosure . The Lanigans can provide you with the help you need with a bankruptcy claim. Contact Eric and Roddy at their Winter Park, Florida, law office with any legal issues you have.

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