Legal Question in Bankruptcy in Texas

Trust accounts as it relates to assets in a bankruptcy proceeding.

Is a trust account considered as an asset which requires disclosure in a bankruptcy proceeding? For example, a trust account for a child's education....If the trust account is listed under a federal tax id number which is not linked or tied to the debtor's social security number...but the debtor is listed as an agent or officer, is it considered an asset which must be disclosed?


Asked on 1/28/98, 1:46 am

1 Answer from Attorneys
Daniel Press Chung & Press, P.C.

Trusts in bankruptcy

If an account or other asset is held in trust,it need not be listed as an asset on SchedulesA or B of a bankruptcy petition -- provided itis a true trust. A debtor holding funds for achild's education most likely will not have a proper trust set up, and will have to treatthe account as an asset. If the trust is revocable and the debtor/trustee is the grantor/settlor, the trust is an asset. Note that in any event,there is a question on the Statement of Financial Affairs that must be filed with the petition requiring disclosure of property held for another. A debtor holding property in trust must disclose truststhere, so it cannot be hidden from disclosure,even if it is not available to the bankruptcytrustee.

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Answered on 1/28/98, 11:24 am


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