What will happen if I inherit property during bankruptcy? 15 Answers as of June 24, 2011

I was in a situation where I had to foreclose on my house, had relocated for my job and my daughter was in my house renting. She moved out with only 2 weeks notice -I filed bankruptcy because you will have to pay taxes as income for the difference between what the house sold for and the loan amount. I was upside down. I have a younger sister who lives with my Mother ( my sister has very severe health issues) is unemployed . This week my Mother was diagnosed with lung cancer and not given much time to live. She would like to leave her house to me so my Sister will have a place to stay. She would like me to pay each one of my brothers and sisters $100.00 per month for the next five years. This would be their inheritance. What will the bankruptcy court consider on this?

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Jackson White, PC
Jackson White, PC | Spencer Hale
It is possible for the bankruptcy court to take this, but it is not an absolute certainty. I recently wrote an article on this on my blog.
Answer Applies to: Arizona
Replied: 6/24/2011
Burnham & Associates
Burnham & Associates | Stephanie K. Burnham
You should be seeking the counsel of an Estate Planning Attorney. Your Mother may need to consider using a Trust (and making you the Trustee) in order for these wishes to be resolved without issue.
Answer Applies to: New Hampshire
Replied: 6/23/2011
Law Office of Margaret D. Wilson
Law Office of Margaret D. Wilson | Margaret Wilson
You must notify the trustee and the court. What happens to the money or property you inherit will depend on what exemptions you have taken, if you can amend those exemptions, the type of bankruptcy you filed, and how much you owe to your creditors. Question 2: The bankruptcy court will consider the house an asset and could sell it to pay your creditors.
Answer Applies to: California
Replied: 6/23/2011
Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
Property you inherit becomes property of your bankruptcy estate IF your right to receive it occurs within 6 months of the date you filed. So if your mom lives more than 6 months from the date you filed, the assets would be yours, subject to the required payments. IF your mother's intent is to leave the house to you in a spendthrift trust for the benefit of your sister, that is an entirely different matter. She should see a trust attorney right a way to set that up so the bankruptcy trustee will not get the house. She must set up a valid spendthrift trust to accomplish this. *Do not attempt to do this yourself. *
Answer Applies to: California
Replied: 6/23/2011
CONSUMER PROTECTION ASSISTANCE COALITION, INC. (DE).
CONSUMER PROTECTION ASSISTANCE COALITION, INC. (DE). | Gary Lee Lane
It becomes an asset of the bk.
Answer Applies to: California
Replied: 6/23/2011
    Theodore N. Stapleton, PC
    Theodore N. Stapleton, PC | Theodore N. Stapleton
    Depends if you filed a chapter 7 or chapter 13 and when inheritance is received. In a chapter 7 the trustee has an interest in any inheritance received within 6 months from the filing of the bankruptcy petition was filed. Please call to discuss.
    Answer Applies to: Georgia
    Replied: 6/23/2011
    Rosenberg & Press
    Rosenberg & Press | Max L. Rosenberg
    The bankruptcy court will consider this an asset of your estate and liquidate it if you are bereft of enough exemptions. This is assuming you inherit within six months of filing the bankruptcy.
    Answer Applies to: Connecticut
    Replied: 6/22/2011
    Bird & VanDyke, Inc.
    Bird & VanDyke, Inc. | David VanDyke
    Any inheritance you receive within 6 months of your filing for a chapter 7 becomes a part of your bankruptcy estate and will be taken from you and liquidated to pay your creditors. You need to talk to your attorney about this.
    Answer Applies to: California
    Replied: 6/22/2011
    The Schreiber Law Firm
    The Schreiber Law Firm | Jeffrey D. Schreiber
    Any inheritance received within six months of filing is bankruptcy estate property and can be taken by the Trustee to pay creditors. You mother should create a trust to allow the daughter to live in the house for her life and allow you to make the payments as trustee, not as the owner. Consult with a wills and trusts lawyer.
    Answer Applies to: California
    Replied: 6/22/2011
    Sariol Legal Center
    Sariol Legal Center | Frank R. Sariol
    You have to disclose any factor that affects your financial situation during your bankruptcy. If you indeed inherit property or cash, you should consult with an attorney before you file BK. However, sounds like you may be appointed Trustee of your mother's estate. In that case the property or money you are managing is not yours but the "estate's". For that reason you should consult with a competent BK attorney as soon as possible.
    Answer Applies to: California
    Replied: 6/22/2011
    Greifendorff Law Offices, PC
    Greifendorff Law Offices, PC | Christine Wilton
    Consult with an estate planning attorney and tell them your situation. They can set up an irrevocable trust that will essentially address your mother's wishes. Also, consult with a CPA regarding the tax consequences on that cancelled mortgage debt as the government may still be waiving it, with proper reporting requirements being met. You really don't want an inheritance in bankruptcy as the trustee could ask for more money under Chapter 13, or under chapter 7 the trustee may take this completely. If it is properly set up in an irrevocable trust for you and your siblings, it may be better protected.
    Answer Applies to: California
    Replied: 6/22/2011
    Bankruptcy Law office of Bill Rubendall
    Bankruptcy Law office of Bill Rubendall | William M. Rubendall
    An inheritance is part of the bankruptcy estate if acquired within 180 days after the case is filed. An inheritance means someone has died leaving you money or property. If the person has not yet died it is not an inheritance yet.
    Answer Applies to: California
    Replied: 6/22/2011
    Ashman Law Office
    Ashman Law Office | Glen Edward Ashman
    It sounds like you made the horrible mistake of filing pro se. If you had an attorney file you'd be calling him and not posting here. An inheritance will have to be reported to the court and the timing will matter. If you have counsel, call him. If you don't you need to retain counsel in your case and have him determine how best to deal with things.
    Answer Applies to: Georgia
    Replied: 6/22/2011
    Law Office of Maureen O' Malley
    Law Office of Maureen O' Malley | Maureen O'Malley
    If you inherit anything within 180 days of the creditors' meeting, the property becomes property of the estate. If you've already filed, talk to your lawyer about how much of it can be kept. If you haven't filed, talk to a lawyer in your area.
    Answer Applies to: Virginia
    Replied: 6/22/2011
    Ursula G. Barrios Law
    Ursula G. Barrios Law | Guillermo Machado
    May become property of the bankruptcy estate.
    Answer Applies to: California
    Replied: 6/22/2011
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