Bankruptcies, Trusts, &
Court-Appointed Receiverships

Bankruptcies, trusts, and court-appointed receiverships are legal mechanisms that can be used to manage financial distress, protect assets, and address financial or legal issues. A third party is appointed by the Court to manage the affairs of an individual, business, or estate.

Planning Ahead. Trusts are commonly used to plan for eventualities, such as incapacity, disability, or death. By establishing a trust, individuals can ensure that their assets are managed and distributed according to their wishes, even if they are unable to manage them themselves. Some of the most common types of trusts include:

• Revocable Living Trust: A revocable living trust is a trust that can be modified or revoked by the grantor during their lifetime. It is typically used for estate planning purposes and can help avoid probate and reduce estate taxes.
• Irrevocable Trust: An irrevocable trust is a trust that cannot be modified or revoked once it is established. It is typically used for asset protection, tax planning, and Medicaid planning purposes.
• Testamentary Trust: A testamentary trust is a trust that is established through a person’s will and goes into effect after their death. It is typically used for estate planning purposes to provide for the management and distribution of assets to beneficiaries.
• Special Needs Trust: A special needs trust is a trust that is established for the benefit of a person with special needs to provide for their care and support without jeopardizing their eligibility for government benefits.
• Charitable Trust: A charitable trust is a trust that is established for charitable purposes and can provide tax benefits to the grantor.
• Spendthrift Trust: A spendthrift trust is a trust that is established to protect assets from creditors and to provide for the needs of the beneficiary over time.
• Asset Protection Trust: An asset protection trust is a trust that is established to protect assets from creditors and to provide for the financial needs of the grantor and their beneficiaries.

What to Expect. If you become involved in bankruptcy, trust, or receivership, you can expect a complex process managed by a court-appointed third party who will focus on protecting the interests of creditors or beneficiaries, developing a plan for repayment or distribution, and ensuring compliance with relevant laws and regulations. The trustee or receiver may provide the following services:

• Asset Management: A trustee or receiver can take control of the assets of the debtor or estate and manage them for the benefit of the creditors or other stakeholders.
• Financial Analysis: A trustee or receiver can perform a detailed analysis of the debtor’s or estate’s financial situation, including reviewing financial records, identifying assets and liabilities, and developing a plan for repayment or distribution.
• Debt Management: A trustee or receiver can work with creditors to develop a plan for repayment or to negotiate settlements of outstanding debts.
• Business Management: A trustee or receiver can manage the day-to-day operations of a business or property that is in financial distress, including making decisions about hiring and firing employees, managing contracts and agreements, and overseeing the sale of assets.
• Legal Representation: A trustee or receiver can provide legal representation in court proceedings, including filing motions, negotiating settlements, and advocating for the interests of the debtor or estate.
• Sale of Assets: A trustee or receiver can sell assets to generate revenue to pay off debts or distribute to stakeholders.
• Reporting to the Court: A trustee or receiver is required to provide regular reports to the court or governing body that appointed them, including updates on the management of assets and financial affairs.

Addressing Insolvency. When the financial situation is no longer tenable, bankruptcy is a legal mechanism for individuals or businesses that are unable to meet their financial obligations to discharge or restructure their debts. The different types of bankruptcy include:

• Chapter 7 Bankruptcy: Also known as liquidation, it involves selling non-exempt assets to repay creditors.
• Chapter 11 Bankruptcy: A reorganization bankruptcy that allows businesses to restructure their debts and operations while continuing to operate.
• Chapter 13 Bankruptcy: A debt repayment plan for individuals with regular income to repay some or all of their debts over a period of 3-5 years.

Dealing with bankruptcies, trusts, and receiverships can be emotionally challenging for clients — particularly if they have invested significant time, money, and effort to resolve the situation. Harrison-Stein, PC can provide valuable expertise, guidance, and support to help clients navigate these complex legal proceedings and protect their interests. Our team is committed to listening to our clients’ concerns, providing reassurance, and guiding them through the process.