Going through bankruptcy can be incredibly stressful. Once your case is closed, you might wonder what to do next. To ensure you protect your remaining accounts, property, and loved ones, consider an estate plan as your roadmap into the future.
Protecting Your Money and Property
Whether you filed for Chapter 7 or Chapter 13 bankruptcy, it’s likely that you now have fewer assets than before. Fortunately, during the bankruptcy process, certain accounts and property are protected under federal or state exemptions. These remaining assets still hold value, and it’s essential to safeguard them through a proper estate plan that includes:
- Beneficiary Designations: For any accounts or policies you’ve retained after bankruptcy (like life insurance or retirement accounts), it’s crucial to complete the beneficiary designations correctly. If you don’t, the funds may go to your estate, leading to the costly and time-consuming probate process. Moreover, going through probate can expose your retirement account to unintended income tax consequences.
- Last Will and Testament: A will allows you to name a personal representative or executor who will collect your accounts and property, pay any outstanding debts, and distribute your assets according to your wishes. It also allows you to specify who will receive your property at death and name a guardian for any minor children. However, keep in mind that using a will may require your loved ones to go through probate if you own accounts or property in your name alone without beneficiary designations.
- Revocable Living Trust: This type of trust is created during your lifetime, allowing you to name yourself as the current trustee and designate a co-trustee or successor trustee for when you’re unable to act. By transferring ownership of your accounts and property to the trust, management occurs outside of the probate court. It’s important to note that while a revocable living trust can streamline asset management, it does not provide asset protection benefits. Caution: Before transferring any accounts or property, ensure your bankruptcy case is closed. Doing so during the proceeding could be seen as fraudulent or voidable.
Additional Protections an Estate Plan Can Provide
While planning for death is often the primary motivator for creating an estate plan, it’s also essential to consider what will happen if you become unable to make decisions for yourself. Here are some important questions to think about:
- Who will make financial decisions for you if you’re unable?
- Who will make medical decisions on your behalf if you can’t?
- What are your wishes regarding end-of-life care?
- What medical treatment do you want if you are diagnosed with a terminal illness or are in a persistent vegetative state?
- Who will care for your minor children?
We understand that you’ve been through a lot. We’re here to help you start this new chapter on the right foot by protecting your assets for yourself and your loved ones.
At Cheever Law, APC, we don’t just draft documents; we ensure you make informed and empowered decisions about life and death for yourself and the people you love, starting with a valuable and educational Life & Legacy Planning Session. This will allow you to get more financially organized and make the best choices for the people you love. If you have already completed your estate plan, we will review that plan at your Life & Legacy Planning Session to ensure that it will work the way you intend and address any holes or gaps that may be present if circumstances have changed since you executed your plan.
To learn more about our one-of-a-kind systems and services, contact us or schedule a no-obligation 15-minute introductory phone call today.