Filing for bankruptcy can affect several areas of your financial life, but it doesn’t automatically change your estate plan or trusts.. It is helpful to understand how trusts and estate planning might be influenced by a bankruptcy filing.
How bankruptcy treats trusts in Ohio
Ohio law protects some trusts from creditors, especially if they’re irrevocable. An irrevocable trust typically removes the assets from your ownership, which means they aren’t part of your bankruptcy estate. On the other hand, assets in a revocable trust might not have the same protection. Since you still control them, creditors may be able to access them during the bankruptcy process.
Trusts created to shield assets right before filing could raise concerns. Courts look closely at the timing and intent behind asset transfers. Transferring property into a trust too close to a bankruptcy filing might result in a challenge.
What happens to inheritances during bankruptcy
If you receive an inheritance within 180 days of filing bankruptcy, that inheritance can become part of your bankruptcy estate. Ohio follows this federal rule, and it can apply to anything passed to you through a will or trust. It doesn’t matter if the estate is still in probate—the timing of the death and the type of bankruptcy you file both matter.
To keep estate planning on track, it helps to know how the timing of distributions or expected inheritances could affect what’s available to creditors.
Planning ahead with Ohio exemptions
Ohio offers several exemptions that protect certain property from being taken in bankruptcy. These can include retirement accounts, a portion of home equity, and even some life insurance benefits. When trusts or estate plans include these types of assets, those protections usually stay in place.
Understanding how these exemptions work helps ensure that your estate plan lines up with what’s allowed under bankruptcy law.
Small adjustments can make a big difference
Bankruptcy doesn’t erase your estate plan, but it can touch parts of it depending on how your assets are set up. If you’re using trusts or expecting an inheritance, it’s worth checking how the timing and structure match Ohio’s bankruptcy rules.
