I filed Chapter 7 bankruptcy but inherited beneficial interest in a trust less than six months later. Can I keep it?

Chapter 7 Bankruptcy 7 views 4 answers
Less than 180 days after my filing , a relative passed on . His will left all assets specifically to a trust , of which I am a beneficiary . ( I didn't know . ) The trust says that upon his passing the Trustee will distribute the appropriate trust shares to beneficiaries free from trust , whereupon the shares will terminate . The trust also says , however , that no beneficiary of the trust estate can dispose of any right , title or interest in the trust until the same has been paid over to them by the trustee . It goes on to specifically say that the intent is to create a spendthrift trust for all beneficiaries . So the trust dissolves upon my relatives death ( again , within 180 days ) but contains a spendthrift clause . What happens to my share ?

Attorney Answers

4
Dorothy Bunce ·
No easy answer, if the trustee decides to pursue this, the decision will have to be made by the judge who will determine if the spendthrift clause protects your interest or not. Hope this perspective helps!
0 upvotes
Matthew Erik JohnsonBankruptcy AttorneySeattle, WA ·
You are required by law to report an inheritance within 6 months of a bankruptcy discharge. Whether you keep it or not will depend on the amount, the trustee's desire to distribute any of the monies to you, and the trustee's interest in applying any of the interest to debts. I also highly advise visiting an estate planning attorney to go over what your rights are, and what the trustees rights are.
0 upvotes
Andrew Davis OostdykEstate Planning AttorneyDallas, TX ·
You are obligated to disclose the financial windfall to the Chapter 7 Trustee. I suggest contacting your attorney or a competent local attorney to review the will and trust to better understand your rights.
0 upvotes
Christopher Leroy WesnerChapter 7 Bankruptcy AttorneyTroy, OH ·
I would suggest that you contact a competent estate planning attorney in your jurisd undue however iction. The trustee may make a claim upon the windfall if it is withing the 180 days of filing.
0 upvotes

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