Bankruptcy Law Questions? Ask a Bankruptcy Lawyer Now.
a) how does this division of assets breakout for forfeiture when my wife and I only, may be involved in the bankruptcy???,
A1: If the assets were transferred to this family trust more than two years before the bankruptcy filing, then the asset would be considered not part of the bankruptcy estate. Otherwise, the bankruptcy trustee can avoid the transfer of the assets and use them to satisfy your creditors.
Note: You characterize your adult children as "owners" of the trust. Trusts don't have owners, they have settlors/trustors/grantors, trustees and benficiaries. If your children were actually grantors of the trust, then assuming that your interest in the trust property is reachable, then to the extent that your childrens' interests are separate (not a joint tenancy), then that portion of the asset would not be reachable by the bankruptcy trustee.
Also, depending upon the specific language of your trust, and the amount to which you may have retained "incidences of ownership" in your trust (revocabiliity, trustee removal, etc.), it is possible that your trust assets could be reached, unless it was originated as an "irrevocable trust." This would be a tricky analysis and could create some expensive litigation in bankruptcy court, if the bankruptcy trustee wanted to reach your trust assets.
b) we have previously recorded a "homestead declaration which for senior citizens like us, has protection up to $125,000 ??.Please explain this credit protection??.
A2: $150,000 in CA for 65 or older where debtor or spouse lives in property. It means if your equity in the home (fair market value minus amounts owed) is $150,000 or less, then the house cannot be sold by the bankruptcy court to satisfy your creditors.
c) If these oil royalties income are projected for future years (25yrs)??, how does this "home owners" protection distribute for our possible debits in bankruptcy??
A3: There is no exemption for royalty income. If you file bankrupty and the royalties are deemed reachable by the bankrutpcy court, then the royalties become part of your bankruptcy estate and they are available to satsify your creditors' claims. The bankruptcy court would order the royalty rights liquidated and the proceeds would be used to satisfy the creditors.
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