28/02/2018Can I own a vehicle in trust, while bankrupt?
This is an interesting question that I was asked by a debtor recently. She has a disable daughter that requires a vehicle to provide special mobility services. When buying the car, she used her daughter’s money that she had earned through grants, work, gifts and savings. Due to insurance restrictions, the mother had to be the sole owner of the vehicle and the sole insured driver.
In Bankruptcy, there is a $6600 exemption for a vehicle, but this vehicle was worth about $12,000. Fortunately, the debtor had already setup a trust agreement with her lawyer stating that in fact, the car was owned by the daughter but held in trust by the debtor.
All property held in trust is exempt from Bankruptcy, if the proper documentation is shown to the trustee. My associates and I reviewed the trust agreement set out by the lawyer and agreed to the exemption.
As a Licensed Insolvency Trustee, we often come across situations that require an extra step of reviewing legal documents, finding case law to compare to and making the ethical choice. It brought a smile to my face knowing that we could help the debtor through Bankruptcy without harming the mobility of her disabled daughter.
If you have any questions regarding your assets, or assets held in trust, please give us a call at 905.479.5712.