Q: Can bank account be garnished due to delinquent student loan?
my 64 year old sister took out several student loans about 15 years ago. At that time, she was diagnosed with advanced stage ovarian cancer. She survived the cancer, but the treatments wiped her out financially and can no longer work. She has no income, no savings, and can't get a job due to lingering health issues. She has not paid her student loans in many years.
She lives with my mom, who is 93 years old and my mom has stated in her Will that she will leave all her assets (a home worth about $600,000.0) to my sister upon her death. We are also in the process of setting up a trust to avoid probate when my mom dies. Since my sister can't afford to keep the house, the plan is to sell the house upon my mom's death and give the proceeds to my sister.
When this happens and my sister receives the proceeds, can the lenders garnish her bank account? Is there a way to protect these funds so that my sister can live off this inheritance?
A: Your question cannot be answered with only the information you have provided. Your will need to get a more in depth analysis with both an estate planning attorney and an accountant. And perhaps a bankruptcy attorney. Any money spent now will reap huge rewards down the road. Hopefully you are using an estate planning attorney for the trust and not a non-attorney who can't give you legal advice. One idea that comes to my mind is maybe a life estate for your sister so she never really owns the house but can live in it until she dies? But I don't practice in that area so you really need someone more qualified to give you advice. So meet with all the above recommended experts to find the best path forward.
A: I agree with my colleagues - I urge you to seek estate planning advice and consult with a bankruptcy attorney as well. Perhaps the probate attorney you are consulting with can also assist. There is much to consider.
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