Part of honestly disclosing all of your assets to the court means also disclosing any trust assets, even if you are only a contingent future beneficiary. If you have a vested interest in a trust, the asset could be liquidated in a Chapter 7 case. Trust assets encompass all of your interests in a trust or property that is held in trust.
Trust Assets In Bankruptcy San Diego
Even if you have an interest in a trust that was created by someone else, such as a trust created by your mother, your father, a relative, or a friend, you must still list that interest. For example, a relative may have created a trust, and placed their home in that trust, and the trust provides that upon their death the property goes to you or partly to you and partly to somebody else.
Even if your interest is merely contingent, you still must list that interest. A contingent interest means that whether or not you get that interest in property depends on the occurrence or nonoccurrence of some event. For example, the trust may provide that you acquire an interest in certain real estate if you remain married to a certain person or if you complete your doctorate degree by a certain age. If you don’t remain married, or you don’t complete your doctorate degree, then you would never acquire the interest in the real estate that is the subject of the trust. Such an interest is called a contingent interest. You must list such a contingent interest in your bankruptcy schedules.
It is quite common, as a homeowner, to place your home in a trust. In that case, when you file bankruptcy San Diego, you have an interest in real estate, that you list on Schedule A (real estate) of your schedules, plus you have an interest in a trust that you list on Schedule B (personal property) of your schedules. The question then is how to not double list your real estate interest. This is usually accomplished by listing your real estate interest on Schedule A of your schedules as if your (not the trust) own the property, and then disclosing your interest in the trust on Schedule B of your schedules and placing a zero value on the trust since you have already once listed the real estate and its value on Schedule A.
The fact that your real estate is in a trust is usually of no consequence to the bankruptcy court. Whether or not you keep your real estate, and whether or not you can remove any liens against it, are analyzed just as if you (and not the trust) are the owner of your property. The important thing is that you must disclose all of your interests in ANY property, including a trust, when you file bankruptcy. Failure to disclose trust assets in your bankruptcy disclosures carries severe penalties. When in doubt, always err on the side of disclosing everything to your attorney and let your attorney make the call as to whether to disclose a potential trust asset in bankruptcy.