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CalAttorney2
CalAttorney2, Attorney
Category: Bankruptcy Law
Satisfied Customers: 10237
Experience:  Civil litigation attorney for individuals and businesses.
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In the process of filing Chapter 7 with a business with an

Customer Question

In the process of filing Chapter 7 with a business with an LLC, our attorney said it would be easier to file personal bankruptcy so we are now in the process, the only concern is that I'm a heir to my home built in the 1950's and the trustee is wanting
information concerning her home. She is in good health and is still in her home? Will the trustee be interested in her home because I'm heir in the future, can she change her Life Estate because she is not involved with the bankruptcy? My attorney says not
to worry their just asking questions for creditor?
Submitted: 1 year ago.
Category: Bankruptcy Law
Expert:  CalAttorney2 replied 1 year ago.

Dear Customer,

Your attorney is taking a calculated risk - your property interest in this real property will pass to the bankruptcy estate when you file. The trustee may or may not choose to liquidate (sell) that asset in order to pay your creditors (or if the trustee does not choose to sell, one of your creditors may decide to do so).

I would definitely recommend following up with your attorney for some more detail on this particular issue as this is an asset, and there is a risk in filing that the property interest will be transferred.

(The sale of your "tail" interest in the property will not affect the current holder of the life estate - she will not lose her home).

Customer: replied 1 year ago.
In inheritance 180 days how does that work?
Customer: replied 1 year ago.
Heir to life estate are attorney wasn't concern he asked us is she still living
As long as he wasn't on the home
Expert:  CalAttorney2 replied 1 year ago.

If you are to inherit property within 180 days after your bankruptcy, you must report it to the Trustee as that inheritance is also going to be included in the bankruptcy estate even though you did not receive it until AFTER you filed your petition.

However, if you already have a current interest in the property (called a "fee tail") this is not an inheritance and is treated differently.

(Like I noted above, your attorney may simply be strategizing your bankruptcy and I don't want to second guess him on that issue (bankruptcy planning is not an exact science), but I would recommend asking some more questions).

Customer: replied 1 year ago.
Mom's in good health and I don't receive the house until she passes
Customer: replied 1 year ago.
The trustee was asking questions we filed July 6 but no creditors are showing up
Expert:  CalAttorney2 replied 1 year ago.

What you are describing is a "life estate" and you own a "fee tail" - this means you have an actual, real, and current interest in your mother's home. This is an asset. Whether or not the trustee is going to act on this is another issue (most will not, but this is based on the specifics of your case).

Customer: replied 1 year ago.
Its an old home worth 80,000 tops just sentimental value. We closed a small LLC BUSINESS and leases were the most concern. We wanted to file on business only but he encourage us to file personal. Wouldn't be enough to cover a whole lot if he could sell
Expert:  CalAttorney2 replied 1 year ago.

Your attorney is probably making the same calculation then.

Please keep in mind, this is a "general legal information" forum and we cannot give formal legal advice or instruction, so while I can offer you the general legal principles that would apply to your ownership rights and as they would work in the bankruptcy framework, I cannot give you the additional assurances or strategy tips that your bankruptcy attorney can provide you when discussing the specifics of your case. (This is why I would refer you back to them with the above framework - you are likely to get the same answer, but it is worthwhile to understand why they are telling you this, instead of just "the trustee is asking").

Customer: replied 1 year ago.
Life Estate. Heir is what the tax noticed says
Expert:  CalAttorney2 replied 1 year ago.

Perhaps you need a local attorney to look at it again.

But in most cases, your mother would be the one holding the "life estate" and you, as the beneficiary, would hold the "fee tail"

Customer: replied 1 year ago.
We had already filed when this came up do we have options?
Customer: replied 1 year ago.
does she have the right to change her life estate?
Expert:  CalAttorney2 replied 1 year ago.

It is too late for her to do anything about changing her estate at this point (as I noted above, her interest in the property is not at risk - she will not lose her life estate).

I cannot give you strategy advice on this forum, but it appears your attorney does have a strategy in mind to deal with this situation (it likely takes into account all of your bankruptcy petition, not just this one issue).

Customer: replied 1 year ago.
It's our former business and personal account all together which added up
Expert:  CalAttorney2 replied 1 year ago.

I understand. Your bankruptcy attorney is going to be able to review all of this together and help you strategize the best way to approach the bankruptcy (and work with the trustee).

Customer: replied 1 year ago.
We were just blindsided with this issue which scared us, cause economy here is bad for small business right now. This could happen 10 years from now just doesn't seem worth the courts dealing with it
Customer: replied 1 year ago.
Our attorney did state they would know before court date
Expert:  CalAttorney2 replied 1 year ago.

It sounds like your attorney is on top of things. If you have questions about what is happening, make sure to ask (including follow up questions). Your attorney has a duty to communicate with you, and they should continue to do so.

Customer: replied 1 year ago.
Thank you
Expert:  CalAttorney2 replied 1 year ago.

You are welcome, and I do wish you the best with this matter.

Thank you for using our forum, and please do not forget to rate my service so that I can receive credit for assisting you.

If you would like to direct future questions to me specifically, you can do so by starting your new question with "For William B. Esq." and a moderator will notify me.

Thank you again, and again I wish you the best.

Bill