Inheritance?

[secondtimer]

I'll be filing ch13 in the next 60 days and am concerned about losing my parents assets that are willed to me. They travel alot and I suggested that they remove me as beneficiary and put my son instead to protect their legacy incase of something catastrophic. Accident etc. I'd hate for their hard earned money to go to my creditors because of my mistakes.

Anyway. My attorney says that after 6 mos the trustee can't touch it. I'm not comfortable with that though.

I live in Delaware ( not sure which district that is )
Anyone know the law here??

[justbroke]

Anyway. My attorney says that after 6 mos the trustee can't touch it. I'm not comfortable with that though.

You posted in the Chapter 13 forum, so I'm going to assume you will be in a Chapter 13. If that's so, your attorney is absolutely incorrect and you may have misunderstood him.

In a Chapter 7 case, the Trustee has the power to take the non-exempt portion of inheritances (by will, demise, or bequeathed) and proceeds for settlements/insurance up to 180 days after the filing of the case.

However, a Chapter 13 case is different. The case is still "pending" and as such, doesn't enjoy that 180-day clause that Chapter 7 cases enjoy. When you are in "active" bankruptcy, which a Chapter 13 extends as long as 36 or even as many as 60 months... all your income is property of the Estate as if it was part of the Estate on the day of filing. This includes windfalls as well, so if you win that Powerball, you are equally liable to pay that money into the Chapter 13.

Now, as for Delaware, "life insurance" proceeds (if the inheritance is a death benefit paid by the policy), are exempt if the policy if "clause prohibits proceeds from being used to pay beneficiary’s creditors". Otherwise, I don't see any exemption for inheritance in Delaware.

Of course, you can always voluntarily dismiss your case, but it may be financially worth it to just pay the Chapter 13 off (at 100%, if it puts you in a better position... and the inheritance is large enough to do so). This is where working with your lawyer is important.

Of course, this is my opinion, but I'm sure on the Chapter 13 Estate being all income received while the case is active/pending.

[helpsoneeded]

What if something does happen to someone and you are in a 13 and do come into some money, How will the trustee know once you are confirmed? It seems like they wouldnt bother anymore unless they had some reason to look into your case. Other then the fact that it is fraud and that you are suppose to surrender it. Just curious on that.

[justbroke]

What if something does happen to someone and you are in a 13 and do come into some money, How will the trustee know once you are confirmed? It seems like they wouldnt bother anymore unless they had some reason to look into your case. Other then the fact that it is fraud and that you are suppose to surrender it. Just curious on that.

While they may not find out... you wouldn't want them to find out that you did inherit money and didn't notify them. This would possibly be bankruptcy fraud, and certainly will get your case dismissed with prejudice.

Just like reporting taxes to the IRS, reporting things to the Trustee is on the honor system. However, if there's an audit, and you get caught... you suffer the consequences of potential criminal charges in U.S. District Court.

[AngelinaCatHub]

I admit, not up to 13 stuff, and I succumb to whatever "Justbroke" knows, may I offer a suggestion? A Trust is considered another entity or person. I can give you a regulated amount. Particularly a Charitable Remainder UniTrust, that cannot be rescinded. I the amount is substantial, you get paid out at a minimum of 5% per year. It can be more. It is taxed free for them, and you pay regular tax on the distribution. Put into an annuity, it cannot be touched by bk at all. After your death, it goes to the Charity. 'Hub

[secondtimer]

Thanks all

I didn't think the 6 mos thing sounded right. It could be she was just having a bad day. I'm starting to consider shopping for another attorney. My current one was recommended by the atty that did my chp7 in 2004.

BTW - I'm also wondering if my 2004 ch7 discharge would prevent a judge from granting a hardship discharge if my life falls apart again during my ch13.

Regards,
Dan

[AngelinaCatHub]

I didn't think the 6 mos thing sounded right. It could be she was just having a bad day. I'm starting to consider shopping for another attorney. My current one was recommended by the atty that did my chp7 in 2004.

BTW - I'm also wondering if my 2004 ch7 discharge would prevent a judge from granting a hardship discharge if my life falls apart again during my ch13. This is speculation that cannot be addressed. It depends on the Judge and your circumstances. None here can predict the future.

Regards,
Dan

'Hub

[Flamingo]

Anyone that goes through a Chapter 13 is probably a part of someone's will of which one may or may not be aware. If the person dies while one is in their Plan and they are part of any inheritance, that inheritance needs to be reported to one's attorney. To try to hide it and think the trustee would not be able to find out is like playing with fire - one eventually gets burned. One is specifically asked prior to filing if they might receive an inheritance or other windfall during the Plan period. It is not worth the risk to try to hide an inheritance while in a Chapter 13.

Your parents' property is still your Parents' property and they can do with it whatever they want. If you want them to change your wills and have them leave it to your son, they can consult with their estate attorney and easily have that done if they are agreeable to have that done.

[secondtimer]

My father is willing to make the change and has not been judgemental which is really out of character for him.

I'm just really concerned that if they both pass away before I get my life back in order that their savings will go to my creditors instead of benefiting a family member.

I realize it is pretty remote that they will both pass in the next five years ( they're in their 70's ) but it seems everytime I try to "plan" things it never works. My recent "plan" has landed me back in bankruptcy so I'm leaning toward protecting assets even if they aren't mine yet. Probably the only responsible financial decision I've ever made.

Regards,
Dan

[wooisme]

Here's a question..............

windfalls are to be paid to the trustee...............suppose you owe $20,000 and you won 30 million dollars............you mean to tell me that you would have to turn IN 30 million dollars after taxes? That's nuts! Hell you could pay off the debts you owe before the bankruptcy with that kind of money..........so what happens to it

[Flamingo]

My father is willing to make the change and has not been judgemental which is really out of character for him.

I'm just really concerned that if they both pass away before I get my life back in order that their savings will go to my creditors instead of benefiting a family member.

I realize it is pretty remote that they will both pass in the next five years ( they're in their 70's ) but it seems everytime I try to "plan" things it never works. My recent "plan" has landed me back in bankruptcy so I'm leaning toward protecting assets even if they aren't mine yet. Probably the only responsible financial decision I've ever made.

Regards,
Dan

There are risks to everything. Your parents probably have things set up as usual that if one passes, all goes to the surviving spouse. If both pass at the same time (which would probably be in the case of an accident and which is usually very remote), at that point the way it is set up it would go to you and and maybe your brothers or sisters if you have any. If you are deceased, it would go to your children, per stirpes. That is a usual, general will. If your parents left your share of their estate to your son, it bypasses you. If your son is a minor, it would be set up in trust for him with a trustee to oversee those funds until he reaches whatever age that is set in that trust by your parents.

Your parents should consult with an estate attorney as to this situation so it can be handled properly. But you need to know that the chance of anything happening during your 13 is probably very remote and you probably really don't have too much to worry about unless your parents are now in ill health.

[justbroke]

windfalls are to be paid to the trustee...............suppose you owe $20,000 and you won 30 million dollars............you mean to tell me that you would have to turn IN 30 million dollars after taxes? That's nuts! Hell you could pay off the debts you owe before the bankruptcy with that kind of money..........so what happens to it

No. Windfalls, to the extend that they pay 100% of the allowed unsecured claims, will be kept. If you owe $20K, you get yoru money from the lottery. Then you contact the Trustee and ask for a payoff figure. Then your lawyer does a Motion to Modify Confirmed Plan. In this Motion, he changes the duration to XX months (where XX includes the next month) and that you are in a 100% Plan. If this is an agreed Order, then the Trustee and your attorney will work this out so there is no hearing. Then you pay the Trustee... after the Plan is converted. Voila!

The timing of the Motion to Modify, the payment, and then the Motion to Discharge Debtor... are all coordinated.

Short story is that you don't give the whole check to the Trustee for him to disburse. You find out how much is necessary, then make the necessary motions to the Court to make sure everything is done properly.

[secondtimer]

But you need to know that the chance of anything happening during your 13 is probably very remote and you probably really don't have too much to worry about unless your parents are now in ill health.

I guess having my father change things would be another one of my "plans" that doesn't work.

Maybe I should just stay out of it.

[Flamingo]

But you need to know that the chance of anything happening during your 13 is probably very remote and you probably really don't have too much to worry about unless your parents are now in ill health.

I guess having my father change things would be another one of my "plans" that doesn't work.

Maybe I should just stay out of it.

We all worry usually unnecessarily during times of financial stress and filing BK is a HUGE stressful time! All sorts of scenarios turn up that usually we would not worry about. It's up to you how you want to handle this with your parents as it involves you financially. Best of luck to you!

[knotholeone]

I have a "what if" Ok your mother in law leaves you a third of what she has and you get the execuitor (mis spelled) to write your grown child a check instead of you (ch 13), they cash it and you put the cash in a safe in your home. can this work?