QUESTION
Getting divorced and filing bankruptcy. Can I put my portion of my husbands 401k into a scholarship fund for my son so creditors dont take it?
Asked on Nov 05th, 2011 on Bankruptcy - Iowa
More details to this question:
my husband and I have to file bankruptcy and I have been told that if I take the portion of his 401k that is entitled to me, it will have to go towards the bankruptcy debt. I am wondering if it is legal to give it as a gift to my son by putting it in an interest accruing account as a scholarship fund that he cant touch till he is 21 years old?
1 ANSWER
William/J Joanis
This is a very good example of why people need to go to "real" bankruptcy lawyers, rather than bankruptcy filing factories. Consult a bankruptcy lawyer when you think bankruptcy is a possibility. Do not try to do things on your own. The 401K is very possibly out of the reach of your creditors already. As soon as you try to make changes to keep it out of the hands of creditors you can actually be exposing yourself, and your son, to the claims of creditors as it could be deemed a fraudulent conveyance since it was a transfer with the actual attempt to keep it from the reach of your creditors. Your divorce lawyer should know a bankruptcy lawyer who you can consult with. We are not in Iowa, so we cannot help you, but I know there are many fine bankruptcy lawyers in Iowa.
Answered on Nov 05th, 2011 at 2:49 PM