If you are considering filing for bankruptcy and may be the recipient of an inheritance within the year, there are some things you may want to consider.
First, any inheritances received within 180 days after the filing of your bankruptcy petition are subject to bankruptcy inheritance laws. If the amount of money or value of the asset (home, vehicle, and etc.) is over the amount available to be exempted for your case, the Trustees may legally use the money to pay creditors and/or have the asset liquidated in favor of your creditors.
Second, should you decide to proceed with the bankruptcy, be sure that the person you may be inheriting from sets up a spendthrift trust on your behalf. If by chance they are incapacitated and incompetent to legally sign documents, it may be too late for you. You may want to reconsider filing for Bankruptcy. However, if they are competent, it is a smart move to have them create this trust for you. This trust would protect your inheritance from the reach of your Trustee and creditors. In the creation of any trust, be sure to have a knowledgeable attorney create it.
Many individuals are aware that they will be receiving an inheritance and try to defraud the bankruptcy system by filing for bankruptcy knowing they have money coming soon. Bankruptcy courts put the inheritance laws in place specifically for these situations, so be careful, and be sure to speak to an attorney regarding filing for bankruptcy and your options before deciding to do so.
If you are considering filing for bankruptcy, please contact Smith Legal Services, LLC (www.mysmithlegal.com) for your consultation.