Income Beneficiary Questions
I'm considering Ch. 7 bankruptcy and have what I think may be an unusual situtation. I have regular income from my job and am the income beneficiary of a testamentary trust set up by my Father. My son is the so-called "remainderman" and would receive the corpus of the trust upon my death. Also, importantly to this trust, I have no access to the principal under any circumstances, and may only receive the income from it. How does bankruptcy treat such a situation? Can the court "invade" a trust like this to pay off unsecured creditors? My impression is that the court could not invade this trust, as, in effect, it is not my "asset" or my "property" -- it's actually more my son's property . . .
Assuming the trust is a properly set-up spendthrift trust, the trustee can't go after the trust principal. The income you receive from the trust may be income for the purposes of the bankruptcy, however.
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