Given Property from a Deceased Relatives Estate

[dlinid]

Hi All,

My DH was given a boat, a car and some other property by the estate of his Aunt. We are in 100% payback, so how do we deal with this property? Will the Trustee just want it added to the list, or will she require us to liquidate it for distribution? We are at month 50 of a 60 month payback.

Cant get ahold of our attorney, he is on vacation this week.

Thank you for your replies!

[LadyInTheRed]

The inheritance needs to be reported to the trustee and he/she can take it, but when it is not cash and you are in a 100% plan, I doubt it will happen. I'm not even sure the trustee has the power to liquidate assets in a Chap 13 if you can pay their value to unsecured creditor's (up to 100% payment) during your plan (hopefully somebody who knows will chime in). Even if the trustee does have that power to liquidate, it doesn't seem worth the trouble when you only have 10 months left in the plan and will pay 100% anyway. If the inherited assets are liquidated, your plan will end as soon as 100% of unsecured claims and the trustee fees are paid.

[HHM]

Get with YOUR attorney.

However, I am going to disagree with LITR, the rule on inheritance is the same across chapter 13 or chapter 7. You only need report it if the person died 180 days after your "filed" BK. Otherwise, the inheritance is beyond the scope of the BK. So, after you speak with your attorney, do whatever you want with the items...have some fun.

Ciao.

[despritfreya]

And I am going to respectfully disagree with HHM.

After acquired property (regardless of its form) is property of a Chapter 13 Estate. See 11 USC 1306(a)(1). However, since OP is a 100% Plan, notifying the Trustee and/or filing an amendment to Schedule B will not change anything.

Admittedly I have not researched this issue and there may be specific case law interpreting 1306 as it relates to inheritances but the plain meaning of the provision seems clear to me.

I do concur that it is important for OP to notify his/her attny.

Des.

[HHM]

The only asset that remains property of the estate after filing is DMI. Unless the debtor specifically files the plan under 1306.

That is only if you filed a plan under 1306. Most plans are filed under 1327(b) vesting all property back to the the debtor upon confirmation. Generally, this election is made in section VI of the plan. The only reason you file a plan under 1306 is if you are facing mortgage issues and want the BK court to retain jurisdiction over the home (asset, property of the estate) to litigate mortgage and foreclosure issues.

[dlinid]

Post Confirmation Recovery

The trustee shall retain the right, post confirmation to recover monies, to recover
property and to avoid liens pursuant to 11 U.S.C. § 541 et seq. Any such recovery
or avoidance shall, when liquidated, be disbursed to creditors as additional
disposable income, in accordance with 11 U.S.C. § 1325 (b);

This is part of my bk plan, I take it this means the trustee has the right to everything but my children?????

[HHM]

Well, that sucks. Either, that is what your district allows or your attorney is a knucklehead.

I am not even sure why our plan would even reference 1325(b), that provision only states that your DMI (disposable monthly income) remains subject to the BK estate. It states NOTHING with relation to other assets.

But the first phrase, regarding 541 means your plan was filed under 1306. However, section 541(a)(5) is VERY SPECIFIC, with regard to inheritance. That statute states "...if such interest [inheritance] had been an interest of the debtor on the the date of filing of the petition...

As such, even if you are a 1306 plan, the inheritance provision still only provides a 180 day look forward form the date of filing your BK.

[despritfreya]

The only asset that remains property of the estate after filing is DMI. Unless the debtor specifically files the plan under 1306. That is only if you filed a plan under 1306. Most plans are filed under 1327(b) vesting all property back to the the debtor upon confirmation. Generally, this election is made in section VI of the plan. The only reason you file a plan under 1306 is if you are facing mortgage issues and want the BK court to retain jurisdiction over the home (asset, property of the estate) to litigate mortgage and foreclosure issues.

Again, I disagree since the Code must be interpreted to give full meaning to ALL provisions. There is no filing of a Plan under 1306 and the plain meaning of vesting language deals with pre petition property. The 2 cases below are prime examples of the issue. Both found that 1306 applies post confirmation but each judge interpreted the meaning of 541 differently:

In re Tinney (Bankr. N.D. Ala., 2012)

"This chapter 13 case was commenced in 2007, and is now before the Court on the Trustee's Motion to Modify Plan. The Trustee's proposed modification would require the Debtor's inheritance from her mother's decedent estate to be used to pay claims of unsecured creditors The Debtor opposes the modification. It is undisputed that the Debtor's mother died more than 180 days after the commencement of this case, and therein lies the issue that must be resolved: whether the Debtor's inheritance is post-petition property brought into her bankruptcy estate under § 1306 of the Bankruptcy Code or is it excluded because it is outside the 180-day window under § 541(a)(5)(A)? The Court concludes the inheritance is property of the bankruptcy estate notwithstanding the expiration of more than 180 days since commencement of this case and, therefore, the Trustee's Motion to Modify is due to be granted. . ."


In re Key, 465 B.R. 709 (Bankr. S.D. Ga., 2012)

"Property of the bankruptcy estate is defined in 11 U.S.C. § 541(a)(5). . . Furthermore, in a chapter 13 bankruptcy, § 1306 of the Bankruptcy Code provides in pertinent part: (a) Property of the estate includes, in addition to the property specified in section 541 of this title— (1) all property of the kind specified in such section that the debtor acquires after the commencement of the case but before the case is closed, dismissed. . . The Chapter 13 Trustee (“Trustee”) notes in the context of a chapter 13 bankruptcy, “property of the estate is expanded and includes in addition to the property specified in section 541 of this title ... all property of the kind specified in such section that the debtor acquires after the commencement of the case, but before the case is closed, dismissed, or converted....” 11 U.S.C. § 1306(a)(1). The Trustee argues § 1306(a)(1) results in the chapter 13 bankruptcy estate including these post-petition inheritances regardless of when Key became entitled to receive the bequest, devise or inheritance. I disagree. The Trustee's interpretation overlooks the express time limitation set forth in § 541(a)(5) and the portions of § 1306(a)(1) that provide that the estate includes the property specified in § 541 and all property “of the kind specified in such section” that the debtor acquires after the commencement of the chapter 13. Id.Section 541(a)(5) expressly excludes inheritances that a debtor becomes entitled to receive more than 180 days after the petition date. I find the general language of § 1306(a)(1) does not pull property expressly excluded by § 541(a)(5) into the property of the estate. “It is fair to conclude that if the provisions of Section 541 apply to define property of the estate the exclusions also apply as set forth in Section 541(a)(5). . .”

_______________________

There are many cases on this topic but due to lack of time this morning the above are the only two I am citing.

Des.