bankruptcy & inheritance

Pending foreclosure on home in Florida.
Living with family & working in Ohio.
Planning to file for bankruptcy soon.

Elderly parent - health issues--will written w/inheritance for self & siblings.

Can I legally protect any inheritance should it occur soon (what's the time frame?) after filing for bankruptcy, so inheritance is not garnished to pay creditors?

Be written out of will? (Will gives my share to a sibling--who can give it to me? when?)
Put my share in a trust? (available when?)

What are the legal options here?
Thank you kindly.

Any inheritance while the bankr. is active may be taken--after that review your details with counsel because it can vary greatly.

If a debtor inherits money or property within 180 days (or 6 months) after filing, these assets automatically become part of the debtor's estate and can be seized, liquidated and distributed to creditors. Inherited assets increase the Chapter 13 debtor's disposable income; therefore the original repayment plan would also have to be adjusted to reflect the increase. Debtors who are beneficiaries of a decedent's estate may look upon an inheritance as a blessing, since there may be additional funding available which may help expedite creditor payments. Assets derived from heir property may be sufficient to settle all outstanding debts and help debtors get back on the road to financial recovery. Depending upon the amount of indebtedness at the time of filing, money willed to the debtor could even shorten the time needed to repay creditors and alleviate the drain on the wage earner's paychecks.

Hello,

First, if you are doing a chapter 13, you can design your repayment plan to protect the inheritance.

If you're doing a chapter 7, you must turn over the inheritance to the trustee if the death of your parent occurs within 180 days from filing.

Having yourself written out of the will, and having your siblings give you the money later on "an understanding" would be considered a fraudulent transfer (transfer without valid consideration). You’d risk having your bankruptcy dismissed, having the trustee come after you for attorney’s fees and fines to recover the inheritance, and possibly even criminal prosecution.

Whether or not a trust would work is a question of state law, and becomes a complex interpretation of the enforceability of the trust. Of course, creating such a trust also limits the flexibility of your use of the money.

Good luck.

Regards,

Kenneth L Neeley
The Law Office of Kenneth L Neeley
Chandler | Gilbert | Queen Creek, Arizona

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Prior to acting on any information contained herein, you should seek and retain professional counsel in your state or other jurisdiction, as applicable.