Unexpected life events will continue to happen even after your bankruptcy case is filed. It is not uncommon for a debtor in a bankruptcy case to experience the loss of a loved one. Nor is it unusual for a debtor to learn that they will inherit money or property from that loved one. What happens to that money or property when it is received during a bankruptcy case? Do you have to tell the bankruptcy Trustee or Court? Can you keep any of it? Will the Trustee get it all? The answer to these questions depends upon when the death occurred, what kind of property is involved, how the property or money was owned by the deceased person and the value of the property.
When a person files a Chapter 7 or a Chapter 13 Bankruptcy case, bankruptcy law creates a “Bankruptcy Estate”. Nearly all of the debtor’s assets at the time that the case is filed are automatically deposited into the Bankruptcy Estate. Normally, if you buy or receive new property after the bankruptcy case is filed, that property is not included in the Bankruptcy Estate, but as in all things, not all property is treated the same. The Bankruptcy Code has special rules for property or money that a debtor receives by “bequest”, “devise”, or “inheritance” within 180 days of the date that the bankruptcy case was filed. The Bankruptcy Code requires that the debtor notify the Bankruptcy Trustee and the creditors about the inherited funds and the debtor may be required to file written amendments with the Bankruptcy Court to disclose the inheritance. Whether you are in a Chapter 7 case, or a Chapter 13 case, once the Trustee discovers your inheritance, there is a good chance that the Trustee may request that you turn over the property or money for the benefit of your creditors.
That is why it is very important that you contact your bankruptcy attorney as soon as you learn that you may receive an inheritance. First, your attorney will help determine what you received. Not all property received after a loved one’s death is legally a “bequest”, “devise”, or “inheritance”. These are legal terms that have special legal meanings. Your attorney should be able to evaluate your situation and determine if it is an inheritance or something else. If it is an inheritance, your attorney will determine when you received it and how much you received. You have options and you may be able to protect all or a portion of the property and money you receive. An experienced attorney, like those at Resnick Law, P.C., has the knowledge and experience to assist you to determine whether your inheritance has to be disclosed, to advise you of your legal options and help you to maximize the amount that you keep for you and your family.
At Resnick Law, P.C., we help people solve financial problems, plan for their future and provide advice about assets, income and debts when the unexpected occurs. If you are having financial difficulty and you think that you may be entitled to receive property or money due to the death of a loved one, and you would like to learn more about the options that might work for your situation, we encourage you to contact us by visiting our website or call us, Resnick & Moss, P.C., at (248) 642-5400 to schedule a consultation with one of our lawyers.