Bankruptcy Law Questions? Ask a Bankruptcy Lawyer Now.
Hi - my name is XXXXX XXXXX I'm a Bankruptcy litigation attorney. Thanks for your question.
Since you are not the settlor (owner) of the trust, and AS LONG AS the settlor lives through your bankruptcy, your beneficiary interest is contingent, meaning it doesn't come into your bankruptcy as property of the estate. This is so because your interest is contingent on the settlor, who can remove you as a beneficiary at any time.
In other words, this would not be an asset of your bankruptcy estate because you're not ENTITLED to the money and your dad (settlor) could remove you anytime. However, if he were to die, the revocable trust becomes irrevocable and you would then have a vested interest in the trust property - - which would become an asset of the estate.
Thus, it is not necessary for you to be removed as beneficiary to keep the trust from being included as an asset in the bankruptcy - - as long as your father doesn't die during the bankruptcy.
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