question about life insurance policy received last year

[cyn5]

My dad died over a year ago and he had a small life insurance policy that I was the beneficiary of (which was exempt from income tax). It was about 60k and we used it to pay off a few bills, pay my dad's mortgage (house has since went into foreclosure and not in my name), etc.

Since this was not reported on our tax returns, do we really need to disclose it (not like we have any of it left)? I guess if trustee asks for over a year's worth of bank statement, you can see right on our statements where we paid bills and things of that nature (of course the cards we paid off back then....we wracked up again). How does inheritance/life insurance that was received in the last year of filing bk play out? There may be some exemptions to it...I haven't checked.

We meet with another lawyer this week and I totally forgot to ask the other one we saw. Any insight on this would be great!

[AngelinaCatHub]

Yes, you must report it. However, explain what you just did. To you, it is income although insurance is usually exempt. I believe though it has to do with what can be garnished. We have an annuity yearly payment, and it was exempt but did count towards our income on paper. Keep all things out in the open. Your explanation should suffice. ‘Hub

[keepmine]

It's a non issue. Since you were not under the control of a bk trustee when you received the insurance payment, you could spend it as you pleased.
The trustee can't take what you don't have.