(Ir)revocable Trust with Annual Payout

[d80indebt]

In 2006, I received an inheritance in the form of a revocable trust (well, I guess it would be an irrevocable trust now, since the grantor has passed away). Each year, until the trust is exhausted, I will receive $5,000. I have received 3 annual payments to date.

I've read through the posts regarding inheritance and trusts. Now, the way that I understand it is that this will only be taken into consideration if it is paid out within 180 days of filing. Since I received the last payout roughly 2 months ago, how would this affect my filing if I were to go ahead with it on Dec 30th? If I do have to claim it in my assets, would I claim the entire trust? Or is it just the annual payout?

I will be talking to an attorney at some point. I am just curious what others have experienced.

[d80indebt]

I forgot to add that the total left in trust is $35,000. My debts (including an $8,000 student loan which I understand will not be discharged) total to about $65,000.

I do not have any real estate and have not used the homestead wildcard yet.

[ssdsco]

Trust exemptions vary from state to state. In NY it's probably an exempt asset. In MD the trustee would take the $35k. You need to find an attorney that understands trusts as they relate to BK and not the kid at the BK mill.

[Flamingo]

Your trust is an asset from which you benefit on a yearly basis. As ssdsco states, it all depends on where you live. Discuss in full with your attorney to see what is applicable to your situation.

[AngelinaCatHub]

There is a difference between a Trust and an Irrevocable Trust. It isn't just because the person died. Before the person passed he could have modified the Trust, or even closed it out. Irrevocable usually is a Charitable Trust.

Now here is the catch and the good fortune Mrs. and I have. We gave about 500K to a Charitable Remainder Unitust. We get 7% of the highest amount per year. Now here is how our magic worked for our good. Merrill Lynch put our Trust into an annuity upon my life as the Trust would be the receiver and the named charity would get the funds. Since it is an "INSURANCE" item, it cannot be garnished or levied and we no longer own the Trust, it is a separate entity. We however are the Trustees. We have to fill out IRS every year on it even though it is not taxable. We can not self deal or ask it for a loan. Only the 7% which is an insurance payment and no one can lien it as insurance.

I would hope the Op would find out how the Trust is being managed. Perhaps he can get the Trustee to put it into insurance annuity? 'Hub

[d80indebt]

Thanks for the replies.

Since I do not actually have anything to do with the trust -- I just get a check, I do not know what kind of trust it is. How would I go about finding out more about the trust? Even the IRS K1 statement doesn't have much detail about what it is.

How does the Bankruptcy trustee get access to the $35k if it is only paid out on a yearly basis? Or does that not matter? I'm not trying to get out of paying the debts with the trust. If the Bk trustee can in fact get access, maybe I can to pay off some of these debts?

For what it's worth, I live in Minnesota.

I'm off to research what to look for in a Bk Attorney... Good times!

[Flamingo]

Thanks for the replies.

Since I do not actually have anything to do with the trust -- I just get a check, I do not know what kind of trust it is. How would I go about finding out more about the trust? Even the IRS K1 statement doesn't have much detail about what it is.

How does the Bankruptcy trustee get access to the $35k if it is only paid out on a yearly basis? Or does that not matter? I'm not trying to get out of paying the debts with the trust. If the Bk trustee can in fact get access, maybe I can to pay off some of these debts?

For what it's worth, I live in Minnesota.

I'm off to research what to look for in a Bk Attorney... Good times!

When you first learned of this trust and inheritance, you should have received paperwork on it from the executor or trustee of the estate. You probably just did not receive a check out of the blue as you posted some information about it in your original posting. That initial paperwork will give you the details you need. Who was the grantor? A family member? Where does the check come from (what bank) and what is listed on the front of the check? A few phone calls should give you your answer as to who to contact if it was. This trust is an asset to you and needs to be reported to your attorney who can properly guide you as to your situation.