Central District Consumer Bankruptcy Attorney's Association

Spendthrift clause and vulnerability to CA fraudulent transfer statutes
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> On Aug 7, 2017, at 4:56 PM, jesseelaw@aol.com [cdcbaa] wrote:
>
> The key issue is whether the trust was revocable or irrevocable when the debt was incurred. Probate Code 18200 makes the assets of a revocable trust available to creditors as long as the settlor retains the power to revoke the trust. Probate Code 18201 allows the settlor to use the exemptions of C.C.P. 703.010 et seq. to protect trust assets. In other words, a revocable trust is a see throughble then it is a separate entity and responsible for debts occurred in its name.
>
> Mark T. Jessee
> Law Offices of Mark T. Jessee
> "A Debt Relief Agency"
> 50 W. Hillcrest Drive, Suite 200
> Thousand Oaks, CA 91360
> (805) 497-5868 (805) 497-5864 (Facsimile)
>
>
> In a message dated 8/7/2017 4:31:27 P.M. Pacific Daylight Time, cdcbaa@yahoogroups.com writes:
>
> For what kind of debt is the trust, rather than the debtors, liable? It seems to me that the creditor should not be able to reach the trust unless the trust signed on the dotted line.
> - John D. Faucher
> 818/889-8080
>
>
> On Monday, August 7, 2017 4:27 PM, "David Tilem DavidTilem@TilemLaw.com [cdcbaa]" wrote:
>
>
>
> As have many of our clients, I have some clients who have set up estate planning trusts. These trusts are not supposed to just sit on the shelf he trust. My clients did what they were supposed to do. We also know that self-settled trusts have no impact on a bankruptcy case, the Trustee can reach those assets without any difficulty and most of us do not resist. We also know that the homestead seems to be available to protect a residence which has been transferred to such a trust. We also all know that such trusts are not eligible for bankruptcy relief.
>
> Heres a new twist.
>
> My former Chapter 7 clients who received their discharge the discharged debtors (discharge violation), the creditor has now sued their trust and taken their default as trustees of the trust. Im trying to figure out what the creditor intends to do with a judgment in hand and what I can do to head them off.
>
> I welcome your ideas, but simply transferring the assets back to the debtors may not help. That could be viewed as a fraudulent transfer. Ihis type of backdoor attack is a problem which we need to be aware of for all our clients. Do we need to be letting the estate planning bar know that this could be a serious problem?
>
> David A. Tilem
> Certified Bankruptcy Specialist Since 1997
> Law Offices of David A. Tilem
> 206 N. Jackson St., #201
> Glendale, CA 91206
> Tel: 818-507-6000 * Fax: 818-507-6800
> Toll Free: 888-BK PRO 4U (888-257-7648)
> www.TilemLaw.com
>
>
>
>
>
>
> The pages comprising this transmission may contain CONFIDENTIAL INFORMATION from Law Offices of David A. Tilem. This information is intended solely for use by the individual or entity named as the recipient hereof. If you are not the intended recipient, be aware that any disclosure, copying, distribution, or use of the contents of this transmission is prohibited. If you have received this transmission in error, please notify us by telephone immediately so we may arrange and correct this transmission.
>
>
>
>

The post was migrated from Yahoo.

If it is a revocable trust there is no distinction between it and the
settlors. It is not a separate entity so the debt was that of the settlors and
it was discharged in the bankruptcy of the settlors. See Pat Greene's post
for the technical explanation.
Mark T. Jessee
Law Offices of Mark T. Jessee
"A Debt Relief Agency"
50 W. Hillcrest Drive, Suite 200
Thousand Oaks, CA 91360
(805) 497-5868 (805) 497-5864 (Facsimile)
In a message dated 8/7/2017 5:00:44 P.M. Pacific Daylight Time,
cdcbaa@yahoogroups.com writes:
Mark:
I appreciate the distinction. As it turns out, this debt was incurred BYTHE TRUST, and not by the individual debtors. I checked the contract. Yes, it is a revocable trust and I supposed revocation may be the best answer
to this problem. But Im wondering if even that could be viewed as a
fraudulent transfer.
David A. Tilem
Certified Bankruptcy Specialist Since 1997
Law Offices of David A. Tilem
206 N. Jackson St., #201
Glendale, CA 91206
Tel: 818-507-6000 * Fax: 818-507-6800
Toll Free: 888-BK PRO 4U (888-257-7648)
_www.TilemLaw.com_ (http://www.tilemlaw.com/)
(https://www.facebook.com/TilemLaw) (https://twitter.com/tilemlaw)

The post was migrated from Yahoo.

For what kind of debt is the trust, rather than the debtors, liable? It seems to me that the creditor should not be able to reach the trust unless the trust signed on the dotted line. - John D. Faucher818/889-8080
On Monday, August 7, 2017 4:27 PM, "David Tilem DavidTilem@TilemLaw.com [cdcbaa]" wrote:
As have many of our clients, I have some clients who have set up estate planning trusts. These trusts are not supposed to just sit on the shelf they are supposed to be funded by having the assets transferred to the trust. My clients did what they were supposed to do. case, the Trustee can reach those assets without any difficulty and most of us do not resist. We also know that the homestead seems to be available to protect a residence which has been transferred to such a trust.f. Heres a new twist. My former Chapter 7 clients who received their discharge are still being pursued by a very creative creditor. Instead of suing the discharged debtors (discharge violation), the creditor has now sued their trust and taken their default as trustees of the trust. Im trying to figure out what the creditor intends to do with a judgment in hand and what I can do to head them off. I welcome your ideas, but simply transferring the assets back to the debtors may not help. That could be viewed as a fraudulent transfer. Im wondering if their home is now vulnerable (no homestead) and whether this type of backdoor attack is a problem which we need to be aware of for all our clients. Do we need to be letting the estate planning bar know that this could be a serious problem? David A. Tilem Certified Bankruptcy Specialist Since 1997 Law Offices of David A. Tilem 206 N. Jackson St., #201 Glendale, CA 91206 Tel: 818-507-6000 * Fax: 818-507-6800 Toll Free: 888-BK PRO 4U (888-257-7648) www.TilemLaw.com n CONFIDENTIAL INFORMATION from Law Offices of David A. Tilem. This information is intended solely for use by the individual or entity named as the recipient hereof. If you are not the intended recipient, be aware that any disclosure, copying, distribution, or use of the contents of this transmission is prohibited. If you have received this transmission in error, please notify us by telephone immediately so we may arrange and correct this transmi
The post was migrated from Yahoo.

As have many of our clients, I have some clients who have set up estate planning trusts. These trusts are not supposed to just sit on the shelf - they are supposed to be funded by having the assets transferred to the trust. My clients did what they were supposed to do. We also know that self-settled trusts have no impact on a bankruptcy case, the Trustee can reach those assets without any difficulty and most of us do not resist. We also know that the homestead seems to be available to protect a residence which has been transferred to such a trust. We also all know that such trusts are not eligible for bankruptcy relief.
Here's a new twist.
My former Chapter 7 clients - who received their discharge - are still being pursued by a very creative creditor. Instead of suing the discharged debtors (discharge violation), the creditor has now sued their trust and taken their default as trustees of the trust. I'm trying to figure out what the creditor intends to do with a judgment in hand and what I can do to head them off.
I welcome your ideas, but simply transferring the assets back to the debtors may not help. That could be viewed as a fraudulent transfer. I'm wondering if their home is now vulnerable (no homestead) and whether this type of backdoor attack is a problem which we need to be aware of for all our clients. Do we need to be letting the estate planning bar know that this could be a serious problem?
David A. Tilem
Certified Bankruptcy Specialist Since 1997
Law Offices of David A. Tilem
206 N. Jackson St., #201
Glendale, CA 91206
Tel: 818-507-6000 * Fax: 818-507-6800
Toll Free: 888-BK PRO 4U (888-257-7648)
www.TilemLaw.com
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The pages comprising this transmission may contain CONFIDENTIAL INFORMATION from Law Offices of David A. Tilem. This information is intended solely for use by the individual or entity named as the recipient hereof. If you are not the intended recipient, be aware that any disclosure, copying, distribution, or use of the contents of this transmission is prohibited. If you have received this transmission in error, please notify us by telephone immediately so we may arrange and correct this transmission.

The post was migrated from Yahoo.