Bankruptcy

Question 1

What is the role of a trustee in Bankruptcy?

Answer 1

• Sell the assets to try and pay off the creditors
• Pay off creditors in an order of priority

Question 2

What is the Trustee in Bankruptcy able to do?

Answer 2

• Carry on insolvent persons business
• take legal action in relation to the estate
• agree compromises with creditors
• sell property

Question 3

What does the insolvent person get to keep in Bankruptcy?

Answer 3

• Tools, books, vehicles and other items needed for their employment
• clothing, bedding, furniture necessary to satisfy basic domestic needs
• property held on trust by insolvent person for anybody else

Question 4

What is the effect of bankruptcy on investments?

Answer 4

• ownership passes to trustee in bankruptcy
• able to surrender any life policies
• Claim any payments of income to the bankrupt

Question 5

What is the effect of bankruptcy on life assurance?

Answer 5

• if not in trust - goes to trustee in bankruptcy
• trust policy - not in bankrupts estate
  - premiums likely to stop
• Married Women’s Property Act Trusts - can not be touched by trustee in bankruptcy

Question 6

What is the effect of bankruptcy on pensions?

Answer 6

• if in receipt - goes to trustee in bankruptcy
• If not in receipt - Assets usually protected (in registered schemes)
  - Trustee can apply to court to get repayment of excessive pension conts.

Question 7

Effects of bankruptcy on settlor of a trust?

Answer 7

• does not effect the trust
• unless prior transaction provisions apply
  
  • if transferred to conceal
  • if it can be proven they were insolvent at the time of the transfer

Question 8

Effects of bankruptcy on Trustee of Trust?

Answer 8

• no direct effect
• might question suitability

Question 9

Effects of bankruptcy of Beneficiary of Trust?

Answer 9

• does not effect the trust itself
• Trustee in bankruptcy can claim any beneficial interest
  - right to income or capital