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I filed a chapter 7 over a month ago and just recently, my parents passed away unexpectedly and left me an inheritance in a family trust. How much of my inheritance can the trustee take? Can they take more than the amount to cover my debts to the creditors?
9 ANSWERS
Bankruptcy Attorney serving Florissant, MO
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Law Offices of Thomas Corcoran Phipps
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The trustee can only take the amount needed to pay off creditors plus his fees and expenses.
Answered on Aug 12th, 2013 at 8:12 PM
Personal Injury Attorney serving Glendale, CA
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JT Legal Group
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Get your lawyer on this immediately. We cannot give advice to people who have attorneys. It all depends on what that trust says.
Answered on Jul 27th, 2013 at 10:45 AM
It will depend on whether or not the Trust was prepared using certain "magic words." A properly prepared trust could be entirely protected from your bankruptcy estate. Sorry to hear of your loss - God Bless. Let your attorney see the Trust paperwork ASAP. And be prepared to provide a copy to your Bankruptcy Trustee as well.
Answered on Jul 26th, 2013 at 2:58 PM
Commercial Bankruptcy Attorney serving Davie, FL
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Law Office of Jeffrey Solomon
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The bankruptcy trustee is entitled to recover an inheritance for the benefit of creditors for an estate in which the person dies up to 180 days after the bankruptcy case was filed. However, there is authority that provides that assets that were already in a trust would not be considered to fall within the 180 day rule so the trustee would not be entitled to these funds. You need to consult an attorney. Also, there is an issue of whether you are entitled to the funds outright or whether the funds are restricted for your benefit in a "spendthrift" trust. The trust documents would need to be examined.
Answered on Jul 26th, 2013 at 2:58 PM
Deborah F. Bowinski
I am very sorry for your devastating loss. You should consult with an attorney to help protect your assets as much as possible.. The answers will depend upon the terms of the trust and whether it still exists beyond the deaths of your parents, or whether the trust terminates at that point.
Answered on Jul 26th, 2013 at 10:57 AM
General Law Attorney serving Cherry Hill, NJ
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Mark S. Cherry, Attorney at Law, PC
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There is a provision in the bankruptcy code where inheritances six months before filing, during the period of bankruptcy, and six months afterward can become property of the bankruptcy. The terms of the trust may protect you, but you must disclose the inheritance and provide the trust documents to the Trustee. If they do take the trust, any funds after payments to the creditors and the trustee fees and commissions would be refunded to you.
Answered on Jul 26th, 2013 at 10:16 AM
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I am so sorry that you lost your parents. The bankruptcy law provides that if a debtor receives an inheritance within 180 days after the case is filed, the inheritance becomes property of the estate. You are required to notify the court and the trustee by amending your schedules to disclose the inheritance. The trustee has the right to the inheritance. You have the right to any funds that are properly exempt. You need to make sure you have claimed the proper exemptions. The trustee cannot take more than the claims of creditors plus the costs to handle the administration the estate. The administrative costs include the trustee's fees and the fees for the trustee's lawyers and accountants. If there are funds remaining after the payment of the creditors and administrative costs, those funds should be yours. If you had a lawyer for your chapter 7 case, please contact that lawyer immediately for assistance. If you do not have a lawyer, please hire one.
Answered on Jul 26th, 2013 at 10:16 AM
Bankruptcy Attorney serving Plantation, FL
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Moffa & Breuer, PLLC
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You might be able to keep everything, but you need to STOP looking for free advice and see an experienced bankruptcy attorney on Monday.
Answered on Jul 26th, 2013 at 9:41 AM
Litigation Attorney serving Stockton, CA
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Patrick Jay Edaburn
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It is difficult to answer this question without knowing more specifics. It is possible the trustee will take part of the inheritance but you should be able to protect some of it. Check with your attorney or if you filed on your own find one for a consult today.
Answered on Jul 26th, 2013 at 9:34 AM