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Category: Bankruptcy Law
Satisfied Customers: 17252
Experience:  14 years exp., CH 7 AND 13 Bankruptcy cases, AFL-CIO UNION PLUS, UFT NYSID AND ALL MAJOR UNIONS
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I live in Michigan. My mother passed away April 5, 2009. I

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I live in Michigan. My mother passed away April 5, 2009. I was in the process of filing bankruptcy and was told by my sibling that they didn't think there was going to be much money, so I continued with the bankruptcy. The file date was 7/27/09. I reported the possibility of inheritence at my 341 meeting. I have just found out there is going to be some money coming my way (over the next 6 - 9 months about $20K through mulitple disbursements) Do I have to report this to the trustee? Can I have my inheritence go to my in-laws and they put it in an account for my kids?
Under current bankrutptcy law a debtor inherits money or property within 180 days (or 6 months) after filing, these assets automatically become part of the debtor's estate and can be seized, liquidated and distributed to creditors. According to Section 545 of the bankruptcy code, trustees can force debtors to relinquish an inheritance after bankruptcy in an effort to exercise the federally-mandated right to collect debtor assets. The bankruptcy law calculates the 180 days from the date of death of the person granting the inheritance.

You have two options:

Your sister can setup a spendthrift trust for your inheritance. The bankruptcy court cannot seize a spendthrift trust if it is properly created.

Also, You can simply not claim the inheritance. You are not by law required to claim an inheritance, and your sister can keep it for your children through a guardian account.
Customer: replied 7 years ago.
If there is a spendthrift trust set up, can we get access to it. We would like to use the money if 6 - 9 months, if possible, to aid in buying a home. I read somewhere that I could have someone else accept the inheritence and after 180 days they could give it to us? Is that wrong information?
yes you could do that, but you would disinherit your share first. Second a spendthrift trust when created can only be controlled by the appointed trustee which could be your sister.
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