The Connection Between Bankruptcy and Estate Planning: Protecting Your Legacy

When facing financial difficulties, most people focus solely on immediate concerns – paying bills, managing debt collectors, and keeping a roof over their heads. However, at Biggs Law Firm, we believe in looking at the bigger picture. Financial challenges don’t just affect your present; they can significantly impact your future and the legacy you hope to leave behind.

Why Estate Planning Matters During Financial Hardship

Estate planning isn’t just for the wealthy. Everyone has assets, values, and wishes they want to protect and pass on. During times of financial distress, proper estate planning becomes even more critical, as bankruptcy proceedings can affect what you’re able to preserve for your loved ones.

The Intersection of Bankruptcy and Estate Planning

Many clients are surprised to learn that decisions made during bankruptcy can have lasting effects on their estate plans. Here’s how these two areas of law intersect:

Asset Protection: During bankruptcy, certain assets are protected through exemptions. These same protected assets can form the foundation of your estate plan. Understanding which assets can be shielded in bankruptcy helps ensure you have something to pass on to your heirs.

Trusts and Bankruptcy: Some trusts established prior to financial difficulties may offer protection during bankruptcy, while others may be considered part of the bankruptcy estate. The timing and structure of these arrangements matter significantly.

Inheritance Timing: Receiving an inheritance during or shortly after bankruptcy can have complex implications for your case. Similarly, your ability to leave inheritances to others may be affected by your bankruptcy discharge.

Managing Family Member’s Finances: Elderly parents often add their children as an additional owner of their bank accounts, either as a form of estate planning or so that their children can manage their finances for them. These funds then become an asset that creditors can look to in times of financial hardship. 

Proactive Planning: The Biggs Law Firm Approach

At Biggs Law Firm, we don’t just help clients get through bankruptcy – we help them prepare for what comes after. Our approach includes:

Coordinated Legal Strategies: We consider how bankruptcy decisions today will affect your estate planning goals tomorrow. This holistic approach helps preserve what matters most to you.

Exemption Maximization: Our deep knowledge of North Carolina bankruptcy exemptions helps us protect assets that can later become part of your legacy.

Post-Bankruptcy Estate Planning: Once you’ve received your discharge, we can help you rebuild your estate plan with your fresh financial start as the foundation.

The Biggs Law Firm Advantage

Bankruptcy laws and estate planning regulations vary by jurisdiction. Our focused experience in Eastern North Carolina means we understand the specific rules that apply to our clients and how local courts typically handle these matters. This regional expertise provides a significant advantage when creating integrated bankruptcy and estate planning strategies.

Common Questions from Our Clients

“Will filing bankruptcy wipe out my will or trust?”
No, bankruptcy doesn’t invalidate your will or trust, but it may affect what assets remain available to fund them. After bankruptcy, reviewing and potentially updating these documents is essential.

“Can I protect my children’s inheritance if I file bankruptcy?”
Yes, with proper planning. Certain assets are protected in bankruptcy, and understanding these exemptions is key to preserving your legacy.

“Should I complete my estate planning before or after bankruptcy?”
The timing matters significantly. In some cases, establishing certain estate planning tools before filing can protect assets, while in other situations, waiting until after discharge makes more sense. This is why personalized legal advice is crucial.

Moving Forward: Restoring Your Financial Legacy

Bankruptcy isn’t the end of your financial story – it’s often a new beginning. With thoughtful planning, the fresh start that bankruptcy provides can become the foundation for rebuilding your estate and securing your family’s future.

At Biggs Law Firm, we bring order out of chaos not just for today, but for generations to come. Our approach isn’t just about solving immediate problems; it’s about helping you restore and protect the legacy you wish to leave behind.

Take the First Step

If you’re concerned about how financial challenges might affect your estate plans, or if you’re wondering how to rebuild after bankruptcy, we’re here to help. Contact us at 919-375-8040 to schedule a consultation.