Monies from Mother in Law

[jersona]

Hello everyone, I am a newbie to this forum so bear with me if I don't know all the terminology of bk's. My wife and I are currently filing a Chapter 13 in San Diego, CA and got all the paper work submitted to the attorney's almost ready to file (a lot of work). The only sticking point now as our attorneys are assembling the final proposal to the trustee is that we show too much equity on paper since my business value is about $21,000 and my wifes Money market account shows $34,000, $30,000 belongs to my mother in law for safe keeping just in case she (or my father in law passes) away. The past few years my mother in law was going through some tough times since my father in law suffered a stroke a few years back and is in a skilled nursing facility practically a vegetable. Add to the fact shes was diagnosed with Type 2 diabetes and has to go to dialysis 3 times a week and have insulin shots. She decided a few years ago to put my wife in charge of a large portion of her monies just in case one or both of the parents passed. The problem is, according to our attorney we cannot exempt this amount since it looks to the trustee that is it ours and must be available to pay some of the unsecured debt we incurred. The biggest problem is that this makes the payment plan payment like $2400 and we definitely can't afford that! Is there any way that anybody knows if we can draw up some kind of disclaimer from my mother in law stating that the monies were not "ours" and belong to my mother in law and we have the monies in the account for safe keeping just in case she did pass? That's the god honest truth anyway. That is why we didn't spend it or use it to pay any debt. Disclosing this to our attorney a few months back when we did the initial consultation, she said NOT to move it out since it will look suspicious to the trustee so we left it there in the Money market account. It technically wasn't ours anyway. Can we have a notarized letter drawn up by my mother in law stating that the $30,000 is hers and we just kept it in out account for safe keeping and will the trustee accept this? Thanks everybody for your help. My wife and I are really stressing about this.

[LadyInTheRed]

In California, you can create an oral trust. Would you say you are holding the funds in trust for your in-law's? If that was the understanding, ask your attorney to try that argument with the support of a letter from your mother-in-law. He may need to do some research of trust law or consult with an estate planning attorney. Your attorney is going to need to fight for you and may lose the fight. It would help if you have a copy of a check from your mother-in-law. It doesn't help that you apparently have combined her funds with other funds in that account. For that amount of money, it seems worth fighting for.

[jersona]

Thank you Ladyinthered for your response. I'm just worried we may not be able to afford that payment our attorneys came up with. I think your idea may be the only way we can make this fly. I guess it's up to the trustee whether he'll accept the letter from my mother in law. We can prove the checks are from my mother in law too since there is a paper trail with bank statement showing the numbers of the checks deposited. Thanks again, your advice is much appreciated!