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VanDLaw
VanDLaw, Attorney
Category: Bankruptcy Law
Satisfied Customers: 833
Experience:  Chapter 7 & 13
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If parents have their childrens names as co-owners ...

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If parents have their children''s names as co-owners on their CD''s, and one of them is involved in divorce proceedings because of their spouse dissapating their assets with the over use of credit cards, can the spouse that caused the dissipating situation get claim to those CD''s if he has entered into Chapter 7. If so, can the CD''s legally be changed to POD to protect the parents'' money?

HelloCustomer

The soon to be ex-husband's bankruptcy will have no affect on your children's CDs as long as his name is XXXXX XXXXX the CDs. Even if one is married, they can take individual bankrutpcy and they only include in the assets, assets that are theirs. Since his name is XXXXX XXXXX the CDs he does not have any ownership interest in them and they will not be included in the bankruptcy petiiton.

You can have a POD on CDs, contact your bank to have this arranged. This is always a good idea. The proceeds pass outside of probate upon death of the owners, but will still be added to the gross Estate for estate and inheritance tax purposes.

 

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Customer: replied 9 years ago.
If our daughter, his wife, has to be included in the bankruptcy, does she have to list the CD's that she is co-owner with us as assets or income?
Yes, she will have to list them as an asset, and they could be liquidated in order to pay creditors. It is in an 'automatic' they would take them but they could be asked that they are cashed in and her "share" taken by the Trustee. If she doesn't have to be included, its best that she not be. Otherwise, if these CDs are gifts transfer them out of her name. She cannot transfer any property appr. 1 year prior to bankrupcty but there is nothing stopping you from doing so.