Is an inheritance advance dischargeable? 12 Answers as of June 08, 2011

I declared bk in October 2008. Two years later my father passed away. He gifted me and my other sibs a great deal of money over the years and he helped me start a business but never asked for or expected repayment. When I asked if he would like to deduct it from my inheritance he said no, that we had all received an equal amount over the years. Now my brother, who is the trustee and executor, is claiming my gifts were loans. Yet my dad’s trust and Will divided everything equally between his children and he did not note any exceptions or deductions for any of his children in his trust or Will. My bk lawyer drafted a letter, noting a precedent, that even if a debt was not listed at the time I filed BK, it is automatically discharged if it occurred prior to when I filed BK. I thought this would put an end to it, but now my brother’s lawyer is calling it "advancements" against my inheritance. Sadly, my BK lawyer suffered a stroke and is no longer practicing. My question is - wouldn’t so-called inheritance “advancements” be the same as a loan? Is there a distinction between a loan, a debt and an advance? Thank so much!

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Jackson White, PC
Jackson White, PC | Spencer Hale
There is a difference between a loan and an advance on an inheritance. You should speak to an estate planning/probate attorney.
Answer Applies to: Arizona
Replied: 6/8/2011
Daniel Hoarfrost, Attorney at Law
Daniel Hoarfrost, Attorney at Law | Daniel Hoarfrost
There are no black and white answers to your question. The legal resolution depends on a determination of how to interpret disputed facts.
Answer Applies to: Oregon
Replied: 6/7/2011
Burnham & Associates
Burnham & Associates | Stephanie K. Burnham
You should hire an Estate Planning and Probate lawyer to assist you. In order for funds to be considered a "loan" or "advancement" there should be documentation that indicates that the funds were considered a "loan" or "advancement". Speak to someone to protect your rights!
Answer Applies to: New Hampshire
Replied: 6/7/2011
Law Office of Harry L Styron
Law Office of Harry L Styron | Harry L Styron
You need to find someone who is experienced in trust law to bring an action against the trustee to compel him to follow the letter of the trust. There is no issue hear of their being debts unless they were documented as such between you and your father. From your description your father made gifts to you and to other members of the family.
Answer Applies to: California
Replied: 6/6/2011
Law Office of Maureen O' Malley
Law Office of Maureen O' Malley | Maureen O'Malley
It seems to me that if there were a loan, there would have been something in writing about it. And if he treated all of you the same, it appears the funds were mere gifts. Your bankruptcy lawyer is correct that debts that are not listed are discharged as long as they were not intentionally omitted to favor a creditor and as long as it was a no-asset case. As to "advancements v.s. loans," I think you need to speak with an estate lawyer in the appropriate state.
Answer Applies to: Virginia
Replied: 6/6/2011
    The Law Offices of Alan M. Laskin
    The Law Offices of Alan M. Laskin | Jared B. Gaynor
    There is a huge distinction, depending on where you live. You need to consult a probate attorney, not a BK attorney, on this issue.
    Answer Applies to: California
    Replied: 6/6/2011
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    Get another lawyer now, a probate lawyer. Your first lawyer was right.
    Answer Applies to: California
    Replied: 6/6/2011
    Bankruptcy Law Office of Robert Weed
    Bankruptcy Law Office of Robert Weed | Robert Weed
    Your bankruptcy lawyer is right; looks like you may need a lawyer who does wills and inheritance law.
    Answer Applies to: Virginia
    Replied: 6/6/2011
    Bird & VanDyke, Inc.
    Bird & VanDyke, Inc. | David VanDyke
    Your issue here, I believe, is more of a wills and trust issue rather than a bk issue. If the trust and will docs do not indicate a set off for the advances then I think you may be ok. Your father's oral statements should not alter the written testamentary documents. In other words, if your father wanted the money you received prior to his death to be an advancement the trust docs must indicate this. This is your better argument. It would seem that if the trust lawyer is indicating that the money is an advance he either has documentation to support this or he may be trying to bluff you into voluntarily accepting the money gifts as advances. My advice is to contact a probate lawyer or any lawyer that understands the issue and have him or her write a letter on your behalf. I think you have an excellent position from the limited info you have provided me.
    Answer Applies to: California
    Replied: 6/3/2011
    Carballo Law Offices
    Carballo Law Offices | Tony E. Carballo
    Whether or not your father was advancing money (rather than giving you a gift) would be a matter of his intent when he gave you the money. That may have to be decided at a trial. I think you brother would have a very hard time proving that your father intended the money given during his lifetime to reduce your share of the inheritance. Unless there is something in the trust that says that the money given was an advance of the amount you would get at his death it would seem your brother would not be able to prove his allegation. It sounds like he is just putting pressure on you to take less than your share.
    Answer Applies to: California
    Replied: 6/3/2011
    Bankruptcy Law office of Bill Rubendall
    Bankruptcy Law office of Bill Rubendall | William M. Rubendall
    An inheritance is an inheritance. There is no such thing as an advance against an inheritance. A person can give an inheritance to whomever he or she wants whether or not there have been so-called "advances" of inheritance. There is a difference between a gift and a loan. In your case a loan would have been discharged in a no-asset case, unless it was received by fraud. It is a question of fact whether there was a gift or a loan. One thing to look for is whether there was a loan agreement in writing. Although there is no requirement of a writing for it to be a loan, a gift is probably what was intended in the absence of an agreement stating terms of repayment, interest, etc.
    Answer Applies to: California
    Replied: 6/3/2011
    Ashman Law Office
    Ashman Law Office | Glen Edward Ashman
    Your lawyer was likely wrong, if your discharge was after 2005. Get a new lawyer to review things. Since you committed a fraud and crime (a felony) by not listing all your debts, courts are unlikely to help you now, and you could go to jail and see your discharge revoked.
    Answer Applies to: Georgia
    Replied: 6/3/2011
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