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How can you file bankruptcy if all your assets and business assets are in a trust for your children?

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That's a really complicated situation, and you will definitely want to see an attorney in your area about it since there are lots of little factors that can completely change the outcome.

Generally speaking, one would probably have a tough time filing bankruptcy in that situation if one put the items in the trust within the past 12 months since the Bankruptcy Court might see that as a gift, and the Court can go back and void any gifts to family members or friends (called "insiders" in bankruptcy lingo) that occured within the past 12 months prior to filing the bankruptcy. If the trust was funded more than 12 months ago, one normally doesn't have to report the funding on their bankruptcy petition, but that alone might not end the issue. Some states have fraudulent transfer statutes that prevent one from changing the ownership of assets to protect them from creditors that go back several years, so depending on what state one lives in, one may have problems.

Please note that nothing in this posting or in any other posting constitutes legal advice; this is simply my understanding of the facts, which I do not warrant, and I am not suggesting any course of action or inaction to any person.

First answer by ID0000000000. Last edit by ID0000000000. Question popularity: 165 [recommend question].

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