I am not certain through whose eyes they determined this. I look around and still see far too many families struggling to recover to consider it over.   And while I acknowledge things may be improving on some level, I still find it hard to objectively look at a parent who cannot find work or lost a huge chunk of a 401(k) plan to say our Country is officially in the clear.

The number of bankruptcies taking place right now equally saddens me.  For many families, bankruptcy may be the only way to break free from the mountain of debt that constantly rests on their shoulders.  Of course that’s not to say this decision is ever taken lightly by those who file, as the consequences of bankruptcy are long-lasting and sometimes severe—especially if you stand to inherit money.

Example: a family member passes away who left you a cash gift in a will or trust.  On the surface it seems like this would be a much needed and timely relief for a family going through bankruptcy.  However, Federal bankruptcy rules declare that if you inherit money from a person who dies within 180 days of the date you filed for bankruptcy, you must tell the courts.   In simple terms, that means the inheritance now becomes a part of your bankruptcy estate and will be distributed to your creditors as the courts see fit.

This also applies to items that you may inherit such as cars, jewelry or furniture.  All of these items are subject to the administration of the bankruptcy estate.  However, this doesn’t mean that items like this are certain to go up on the auction block.  You can claim exclusion on certain things and the bankruptcy trustee has a certain amount of discretion in choosing what to liquidate. However, it can be extremely stressful to think about a family heirloom that has been in your family for years going to auction.

Hopefully your loved one had a Charlotte wills and estates attorney who knew a thing or two about protecting their inheritance from things like bankruptcy, creditors, divorce and the like. Ideally, your loved one would have been advised to set up a trust so any inheritance passed down to their family members would be out of reach from creditors and the courts.  If they did not, and you have not filed bankruptcy yet, this may still be an option if your loved one is willing to have their plan looked at by a qualified Charlotte wills and estates attorney.

Planning to avoid giving your hard-earned wealth to creditors is not illegal or immoral either.  You should think of it the same way you would when considering tax planning.  Tax planning is legal, but tax evasion is not.  The difference is whether you play by the rules and are honest.  For example, not telling the courts you received an inheritance is illegal and you could face serious consequences.  However, you are not skirting the rules if you are the recipient of a spendthrift trust; that was not your choice.

If you or your loved one needs help facilitating such a trust to protect your inheritance from the claims of creditors, simply call our Charlotte wills and estates office at (704) 843-1446 to schedule a “Peace of Mind Planning Session” at no charge ($750 value).  We will walk you through the necessary steps that must be taken to protect your inheritance from a bankruptcy filing or any other creditor’s claim. However, these appointments are limited to 5 per month so call today!

Through the Probate process, beneficiary names, accounts, account numbers and values are required to be disclosed.  We can all agree, I am sure, that this seems like a huge violation of our privacy.  What goes hand in hand with this required disclosure are the potential safety issue this poses to those inheriting your estate.  There are a lot of unscrupulous people who prey on widows and beneficiaries to try to separate them from their inheritance.

So why then is this information made available to the public?

It may be easier to pallet the lack of privacy if you can better understand the true purpose of probate.  One of the primary purposes of probate is to make sure the creditors of the deceased person have an easy way to collect any debts they are owed from their estate. For that reason alone, the probate process must be open and public.  Notice to creditors is required to be given in North Carolina with a mandatory waiting period of 3 months to allow the creditors sufficient time to file their claims.

This information is also available to the creditors of your beneficiaries so that they have notice that they are inheriting an estate. Under this scenario, the creditors could bring an immediate claim against your beneficiary, which may ultimately result in your beneficiary never receiving the inheritance you wanted to leave them.

However, to be clear, I am in no way advocating that debts go unpaid.  In fact, you should instruct your executor to pay your debts.  But, wouldn’t you rather direct how this process goes rather than leaving it to the courts?

One way to do that while simultaneously stopping the violation of privacy and loss of control over the distribution of your estate is to create a revocable living trust.

Unlike a will, a living trust is a private document that will not become a matter of public record because it does not have to be filed with the probate court.  There is no statutory requirement in North Carolina for the Court to over see the management of a living trust.  Therefore, you can name beneficiaries and provide gifts while still attaining privacy since only the trustees and those involved in trust administration will know the contents of a living trust.  This means that no creditor of yours or your beneficiaries, no disgruntled relative, no scam artist, and no nosey neighbor will ever have access to the details of your financial history.

Remember, there are people out there who make a living preying on young or vulnerable people that have just inherited something from an estate. They troll these public records daily looking for victims of their next heist or scam.  Fortunately, with a bit of planning, you can protect your family from such privacy violations that accompany the probate process.  I recommend talking to your Charlotte trusts lawyer about living trusts and how they can help your family if something unexpectedly happens to you.

Fortunately, we’ve made that process easier than ever by making five (5) free “Peace of Mind” planning sessions available to readers of our blog.  Simply call (704) 843-1446 and mention this article to reserve your spot.  Your family will thank you for it.

I recently attended a seminar regarding Collections and found the information that was provided to be too valuable not to pass along to you.  Thank you to Attorney Douglas J. Tate of Newitt & Bruny in Charlotte, North Carolina for the information. 

1.  Do not sell on credit;

2.  When taking credit applications make certain to collect the following information:

• name
• address
• telephone number or numbers
• fax number
• email address
• website address
• type of business (LLC, Inc., sole proprietor)
• state where the business is registered
• employer identification number (EIN) or Federal Tax ID number
• business license
• the names of each person who is permitted to make purchases for that company
• credit references
• signature of Authorized Person

3.   Verify all information provided to you on the credit application;

4.  Give a reasonable credit limit – do not over extend your allowable limits;

5.  Provide specific written credit terms;

6.  Obtain personal liability as well as corporate liability;

Stay on top of your accounts; do not let your accounts get too far behind. If they cannot pay one month, you need to assume they cannot pay month two, three or four.  By having the proper information at the beginning of your relationships with your clients, you will be in a much better position to avoid accounts going to collections.