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What happens if I inherit money after my Bankruptcy is Filed?

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First of all, if you have inherited money, it is probably due to the loss of someone close to you. And for that, we are truly sorry for your loss.


If you receive an inheritance within 180 days following the filing of your bankruptcy, and it is received during the same 180 days following the death of the person who granted you the inheritance, it automatically becomes part of the bankruptcy estate.


If you receive the inheritance after 180 days, you have the option not to include it in the bankruptcy estate if you have filed for a Chapter 7 bankruptcy. If you filed under the protection of a Chapter 13 filing, you may still need to include the inheritance as part of your reorganization, repayment to creditors plan.


It is not illegal to identify a potential asset to be received by inheritance. Death is not predetermined and therefore pre-planning for a potential inheritance is prudent estate planning.


If you are expecting an inheritance asset, determined by a grantor (the person gifting or granting the inheritance) prior to death, and proceeds are directed into a trust, established for a beneficiary (you and others near to you), your creditors cannot touch the trust assets.


Pre-established estate options established by the Grantor (the gifting or granting person)

Spendthrift Trusts (an untouchable trust set up for beneficiaries)

Codicil to the Will (a change in the Will by the Benefactor-Giver)

Disclaiming the Inheritance (you refuse inheritance, goes to 2nd beneficiary)


Remember, there is nothing wrong with planning to maximize the benefits of bankruptcy. You can legally do this by planning with an estate attorney.


CBP comment: It is illegal to hide an inheritance, by not telling the bankruptcy court about it, or using illegal means to avoid including it in the bankruptcy estate.  If you plan to receive an inheritance during, or after, your bankruptcy please discuss with your bankruptcy attorney.


This is not a simple issue. Please discuss this with the Sponsor of this essay.