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Consider bankruptcy as you start working on your estate plan

On Behalf of | Dec 21, 2020 | Estate Planning

Estate planning is meant to cover what happens to your assets when you pass away. It’s also designed to tell others how you want your estate to be handled if you can’t care for yourself any longer.

Estate plans are beneficial for plenty of reasons, but one of them is the protection that they can offer against bankruptcy. If you had a bankruptcy in the past and want to make sure your assets are protected in the future, it may be time to talk to your attorney about estate planning and building trusts to protect your assets.

Why are trusts so helpful in estate planning?

Irrevocable trusts, in particular, are helpful when doing your estate planning. These trusts hold assets out of your name. This means that they won’t be accessible by creditors so even if you go bankrupt in the future, those assets won’t likely be at risk.

Revocable trusts aren’t the same because you can still access what’s inside. In the same way, the court could ask you to take out those assets to settle debts with your creditors. Revocable trusts do have to be listed on your list of assets if you go through a bankruptcy in the future.

 Is it worth thinking about how bankruptcy could affect you when planning your estate?

Yes, it is. Even if you don’t go bankrupt in the future, you’ll be taking significant steps to protect your assets and your beneficiaries’ inheritances. Your attorney can give you more guidance on the best methods to protect your assets from creditors in the case that you owe debts when you pass away or can no longer manage your own accounts.