Revocable Trust question

[Skipper]

Does the "exempt/non-exempt" determination apply to an asset that is in a Revocable Trust, if the Trustee is the debtor?

I have a Revocable Trust (in AZ) for my children in which an asset (small piece of property/land) sits. It has been in the Trust for the past three years. I am the Trustee.

I ask the question, because I do not know. I would assume that the property would be included in a bk estate, but I would like to hear some thoughts.

Thanks in advance,

Skipper

[justbroke]

Who was the Grantor?

[Skipper]

Who was the Grantor?

Hi Broke,

If the Grantor is the person that originally put the asset in the Trust, that would be me (the potential debtor). As a single Dad, I set up the Trust three or four years ago on behalf of my minor kids (for life insurance, ect.) In addition, I put the land in the Trust's name at that time.

This is not a current or recent effort to skirt anything... I just cannot find much info regarding the impact of having an asset in a Revocable Trust that I am the Trustee of.

Thanks again!

Skipper

[justbroke]

Because it's Revocable, the asset may be exposed since you are the Grantor. You should assume, with all due caution, that a Revocable Trust would allow the U.S. Trustee (UST) to step into your shoes as Trustee and Grantor. Then the UST would revoke the Grant and take the asset.

If the asset has no real liquidity (no value or no equity), the UST is less likely to revoke the Grant.

Of course, this is just my opinion of what the impact of filing Bankruptcy is on a Revocable Trust. An Irrevocable Trust or even a Charitable Remainder or Charitable Lead Trust would not be property of the Bankruptcy estate as they are irrevocable in nature.

[StartingOver08]

When you file, you will need to provide copies of the Trust documents to the Trustee. In my case, I was surrendering the real estate in the Trust so it became a non issue, but if you are not planning to surrender - then JustBroke is correct.