Question Anyone sold a future inheritance?

[EmmaPeel007]

I did a search in the threads and couldn't really find the answer, so I'm hoping someone here has some wisdom to share.

I want to file chapter 7. The paperwork is done and being sent to me for signature.

I am also a party to a family trust. The trust is to take care of my uncle who's been on drugs and in and out of jail his entire adult life. If he should have a child everything will go to the kid (hey, I've seen people clean up). Otherwise, if he passes away without any heirs half of the trust goes to me and my brother and the other half to a charity. It would be around $200k.

My lawyer says that if I really want to file Chapter 7 I should look into selling my inheritance and settling with the creditors since that's what the trustee will do - they'll take my share in the inheritance and sell it for however much they can get. If I file Chapter 13 I get to keep the inheritance - if there is any.

Now the family trust is pretty tight. I believe there is a spendthrift clause as well, but who knows - maybe the trustee has special powers to overcome such things.

I really don't want to file Chapter 13 - it kinda freaks me out.

Has anyone ever sold their share in an inheritance or know anyone who's done it? Just looking for information.

[HHM]

We may need some more ground here.

But, if the trust hasn't vested to you, then it is not your asset and therefore not a part of the BK estate.

Could you, right now, today, liquidate the trust. If the answer is no, then the trustee can't either.

[AngelinaCat]

We have a Charitable Remainder Unitrust or CRUT for short. It is non-revokable and is it's own entity. Neither my husband or I can alter it. We receive a yearly stipend, and after both of us are dead, then it goes to the named charity.

We also have a Family Trust, which is revocable. Into this trust goes all of our income.

We filed a C7. We wanted to file a 13, but then I lost my job, which forced us into the 7. Other than the stipend, my husband is retired and with health problems, so cannot work full-time. He gets Social Security and a pitance of a pension. I am still working a PT job; have not been able to get a FT position in our area. Many places are cutting back or going out of business.

Our trustee questioned us very little about these Trusts at our 341. We were discharged on Aug. 13. Even so, we are an asset case, and are having to purchase our stuff back from the BK estate. I think this is because we proabably valued our stuff too high and there were errors on both our part and the attorney's part that caused this.

But in trying to answer your question, no, the trustee has not been very interested in the trusts. And if you don't stand to inherit anything until after the uncle passes--and it doesn't come within 180 days of your 341--you can't do anything with it because you don't own or control it.

We were asked if we were expecting an inheritance within the 180 days. That is why I mentioned that.

Good luck.

[2Bshinyandnew]

I did a search in the threads and couldn't really find the answer, so I'm hoping someone here has some wisdom to share.

I want to file chapter 7. The paperwork is done and being sent to me for signature.

I am also a party to a family trust. The trust is to take care of my uncle who's been on drugs and in and out of jail his entire adult life. If he should have a child everything will go to the kid (hey, I've seen people clean up). Otherwise, if he passes away without any heirs half of the trust goes to me and my brother and the other half to a charity. It would be around $200k.

My lawyer says that if I really want to file Chapter 7 I should look into selling my inheritance and settling with the creditors since that's what the trustee will do - they'll take my share in the inheritance and sell it for however much they can get. If I file Chapter 13 I get to keep the inheritance - if there is any.

Now the family trust is pretty tight. I believe there is a spendthrift clause as well, but who knows - maybe the trustee has special powers to overcome such things.

I really don't want to file Chapter 13 - it kinda freaks me out.

Has anyone ever sold their share in an inheritance or know anyone who's done it? Just looking for information.

I dunno, this doesn't sound right to me. Was this a bankruptcy attorney who advised you to look into selling your inheritance? As previously posted, the standard question the trustee asks is if you expect to be the beneficiary of an inheritance in the next 180 days (6 months). Is your uncle ill with a terminal illness that will result in his death in the next 6 months?

Also, as HHM said, if you cannot liquidate the trust today and use the proceeds for your own benefit, the trustee cannot either. Even if you are the administrator of a trust for the benefit of your uncle, I suspect that any money taken out or distributed from the trust is for the benefit of you uncle, and therefore you cannot use it to pay your debts, at least while he is alive.

I'm not sure what your attorney was getting at. Are the assets in the trust invested in real estate? Stocks? Is it a life insurance policy that you could sell for a lump sum, like those "Get Cash Now in a lump sum by selling all or part of your monthly annuity or structured settlement payments" type of deal you see on T.V.?

[EmmaPeel007]

Well good news! I heard back from the family trust and there is a spendthrift clause which means that "the bankruptcy trustee cannot liquidate your trust remainder and you cannot sell your remainder interest in the trust" because of this clause.

I sent this info to my lawyer and his response was one word - "Beautiful."

Thanks all for your input. It's much appreciated. I'll be getting my CH 7 paperwork this week to review. If all is well, I'll be filing this month.

[AngelinaCat]

Thanks for letting us know. Good luck to you!