Bankruptcy Law Questions? Ask a Bankruptcy Lawyer.
Hi - my name is Chris and I'm a Bankruptcy and Consumer Protection attorney here to assist you.
1) How long ago was the gift given to friend (b)?
2) Was friend (a) solvent or insolvent when the gift was given? (Solvent means total assets exceeded total debts.)
There were two payments. Half of the gift was given a couple months earlier and the balance was given a few weeks before being diagosed with terminal cancer. The company and individual are still solvent. No bankrupsy was filed and there are future expectations of revenue that will be paid to the IRS. It's expected to close without owning any money but very hard to determine. The friend (A) is a plaintiff's attourney and has cases that will settle or be awarded judgements for new revenue. The company/estate may not hit bandrupsy ever. I am asking in case there is a shortage and the IRS is owed money from the estate, will they go back to the reciepant of the monitary gifts for repayment to the estate?
Thank you for your response.
There are 2 factors the Bankruptcy court looks at to help determine whether a pre-Bankruptcy transfer of assets (aka gift) can be deemed a "fraudulent transfer", and therefore reversed. Those 2 factors are how much in advance of the Bankruptcy the transfer was made (in this case less than 2 years before filing), and whether or not the Bankruptcy filer was solvent at the time of the transfer (gift).
In order for a gift to be deemed a "fraudulent transfer", and therefore subject to forfeiture, that gift must have been given less than 2 years before the Bankruptcy filing and the Bankruptcy filer must have been insolvent at the time the gift was given.
Since friend (a) was solvent at the time the gifts were given, friend (b) will not have to give up his or her home if friend (a) files a Bankruptcy.