Trust protections

[StevieB63]

What is the name of your state (only U.S. law)? Nevada

I have a question relating to bankruptcy. My wife is the trustee and sole beneficiary of a revocable living trust for her mother. Due to the recent economic crises and my wife's health, we have suffered an extreme decrease in our income and are being forced to file bankruptcy to protect our home and auto's.

My question is that my wife's mother is concerned that her land/property (FYI, located in Wyoming) that is in the trust will somehow become part of our assets and subject to scrutiny by the bankruptcy court.

My understanding is that while the asset (Wyoming property) is still held in the trust, that my wife's creditors have no access to the asset because the beneficiary (my wife) has no control over the property until the trust becomes irrevocable upon the death of her mom.

Is this correct?What is the name of your state (only U.S. law)?

 

[TrustUser]

that is correct, unless your state is way different than typical.

your wife's mom's property is hers and hers alone, until she dies. then her trust dictates what is to be done with her property. the fact that your wife is the trustee has no bearing.

the trustee is simply the manager. the trustee has no beneficial interest in anything. to be exact, your wife is a contingent beneficiary. at the moment, the mom is the lifetime beneficiary.

your scenario is one of the big reasons that i suggest to people to keep their assets in trust after death, instead of outright distribution. if this is done, then the assets in the trust are not reachable by the creditors of the beneficiary.

you may want to discuss this point with those involved.