If it’s convenient to keep a home or bank account in joint names for estate planning purposes, the concept of bare legal title may protect that asset from being sold in bankruptcy. Bare legal title occurs when someone has a purely legal, but not equitable, ownership interest in an asset. If a person holds title in their name but has done nothing to contribute to the value of the asset, that person may be found to hold no equity in the asset. If those facts can be proven a trustee in bankruptcy will usually leave that property alone.
For more detail on this topic see the article Don’t Panic: Bare Legal Title May Keep Property Out Of Bankruptcy
Can My Trustee Grab My Parent’s Money If My Name Is On The Account?
Ronald J. Drescher has been practicing since 1986 in the areas of business transactions, commercial litigation, loan documentation, bankruptcy, creditors’ rights, and out-of-court workouts. His experience also includes corporate reorganizations, insolvency, business and tax planning.
