Do not Keep a Home Purchase a Secret During Bankruptcy

For the ordinary person who sees a home he/she likes, s/he may let a real estate agent know to begin the purchase process, and conclude by signing their name in closing documents, making where s/he lives public in home sales reports. However, according to Zillow.com, celebrities often keep where they live a secret with non-disclosure agreements, Limited Liability Companies (LLCs), or living trusts. This is a technique that is useful for real estate investors or any person who simply wants to maintain their privacy, but not for a person thinking about filing bankruptcy or has a pending bankruptcy case.

A LLC is type of business entity that requires few formalities, and provides limited liability protection to members. An LLC is formed in some jurisdictions by filing articles of organization with the Secretary of State.

A person creates a trust with (1) present intent, (2) trust property, (3) beneficiary to enforce the trust, (4) trust purpose not contrary to public policy, (5) appointed trustee.

A non-disclosure agreement is a contract, in which the parties agree not to publicly disclose information that a party wants to stay confidential.

To maintain privacy, a home buyer can set up a trust or LLC, and place the ownership of the home in the name of the trustee or LLC member. The LLC member and the trustee would be someone not easily connected with the home buyer. For example, it was reported that when Jennifer Aniston purchased a New York penthouse, she created “Norman’s Nest Trust.” Norman was Aniston’s dog. However, when someone is in the midst of a bankruptcy case, or is contemplating bankruptcy, the person needs to disclose all his/her assets, and be truthful of the property he/she owns to the bankruptcy trustee and the court. Not disclosing all assets or attempting to hide assets by putting it under someone else’s name or creating entities to hide assets may be considered a crime when someone is involved in a bankruptcy case.

For the person not in bankruptcy, to ensure privacy in the real estate transaction, a home buyer can have everyone involved in the sale, including the real estate agents, sign a non-disclosure agreement. Agents may sign away to earn trust, and to protect a buyer’s privacy when it means repeat business. After signing a non-disclosure, the party receiving confidential information has to be careful not to let anyone know the name of the buyer, not even property inspectors. The name of the buyer becomes legally protected confidential information and may be classified as a trade secret.

A person who has filed bankruptcy may think a non-disclosure can keep some of his/her assets away from creditors, but in a bankruptcy petition, the debtor is asked to disclose all assets so the debtor has a legal obligation to volunteer property transactions even when another party may be forbidden to do so by non-disclosure.

Contact an experienced New York bankruptcy attorney to learn more about bankruptcy asset disclosure requirements.

Table of Contents

Contact Us

Featured Blog Posts

What is IRS? IRS Tax and Audit Guide: Role of Internal Revenue Service in Enforcing Federal Tax Laws. Contact the IRS for Federal Tax Return, Form W-9 and More.

Introduction to What is IRS (Internal Revenue Service) The Internal Revenue Service (IRS) is a critical agency within the United States responsible for administering and enforcing the federal tax laws for the United States government. It plays a pivotal role in funding essential public services and supporting the nation’s economic

Read More »

Where is my New York State tax refund?

Introduction When tax season comes to a close, many New Yorkers eagerly anticipate receiving their state tax refunds. It’s a well-deserved reward for diligent taxpayers, providing a financial boost that can be used for various purposes. In this article, we will explore the ins and outs of the New York

Read More »

Miami Florida Tax Articles

Florida Tax Guide Is Social Security Taxed in Florida Federal Tax Benefits of Retiring in the State

Florida Tax Guide: Is Social Security Taxed in Florida? Federal Tax Benefits of Retiring in the State of Florida 2023

Social Security benefits serve as a vital source of income for many retirees. As individuals near their golden years, understanding the nuances of Social Security taxation becomes crucial. In this

September 11, 2023
Florida Tax Information for Taxpayers and Tax Professionals Do I Need to File State Income Taxes in

Florida Tax Information for Taxpayers and Tax Professionals: Do I Need to File State Income Taxes in Florida? Role of Florida Department of Revenue

Are you a resident of the Sunshine State wondering about your state tax obligations? Understanding whether you need to file state taxes in Florida is essential to ensure compliance with

August 28, 2023
Florida State Tax Rate Is There An Income Tax in Florida Everything You Need To Know About Fl ()

Florida State Tax Rate 2023: Is There An Income Tax in Florida? Everything You Need To Know About Florida Tax. Florida Income Tax Calculator

In a world where state income taxes are the norm, Florida stands out as a haven for residents seeking a reprieve from this financial burden. The Sunshine State has gained

August 18, 2023

Have More Questions?

If you have not found the Tax & Accounting answers you are looking for, feel free to search here and browse our article catalog!