Seriously Nervous

[LizardTail]

Hi all,

I've been in the pre-planning BK stage for about 4-5 months and am planning on officially filing this coming week. However, both of my parents are NOT well and aside from the horrible part of potentially losing one or both of them, I'm concerned that this may happen with the next 6-8 months.

I would stand to inherit much more than my debts, ... do I have reason to be concerned about the inheritance portion of this. I know about the 180 day rule, but is there any way inheritance monies won't go to the trustee? Anyone ever had this experience?

[Mensa1]

TT: Any expected inheritances in the near future? They ask it to every debtor. I would either get your case filed and see if the clock ticks beyond the 180 days from filing or I would hold off filing and expect to attempt to settle your debts for a lot less than what is owed. If you had a goodly sum of cash from which to strike settlement deals, assuming that we are talking typical consumer debts, the discount rate should be substantial; 20-30% settlements, since you are on the threshold of Bk.

If something happened while you were in Bk I believe that you would be obligated to report the change in circumstances. I suppose that this also depends on if you stand to inherit funds on the first passing of one of your parents, or if all assets transfer to the surviving spouse (unlimited marital deduction), and you wouldn't inherit until the surviving parent was deceased. Not trying to be too technical here but these are considerations that may effect the outcome, if you file.

Another potential factor here, (although nothing concerning Bk specifically) and with no idea of knowing how much you stand to inehrit, 2010 is the last year of estate tax reduction/reform and there are NO (as in zero) Federal Estate taxes in 2010. Doesn't matter whether the estate was `100 mil, the federal estate tax rate for 2010 is 0. In 2011 estate taxes return to the 1 mil exemption before fed'l estate taxes kick in, and they start at 50% of all assets above 1 mil. Maybe this aspect is of interest, maybe not, so if not disregard this last paragraph.

[MSbklawyer]

You need some estate planning. Have your parents set up their will to leave all their money to a revocable spendthrift trust with you as beneficiary of the trust. After the 180 days is over, they can revoke the trust and put their will back to normal. If they die within the 180 day period, the trustee couldn't get your money.

Pretty slick, huh?

[justbroke]

I love spindthrift trusts. They do need to be setup the right way so that the Trustee can't step into the shows of the beneficiary. This type of trust, which I was just researching earlier today, is great to protect inheritances from creditors!

[LizardTail]

Thank you for a very enlightening response. The way it's set up, each child (4 of us) will automatically receive inheritance, it's not going to the surving spouse, even though they are married and have been for 52 years. Inheritance amount would exceed $100.000.00. Should they both die this year, their home is worth in excess of $2 million.

It's VERY strange talking like this on an internet forum about my parent's future death and I never thought I would be in bankruptcy at this given time. Once the credit cards did their rate hikes and lowered limits, my walls came crumbling down, THEN, I got laid off. I was making $60K and doing fine. Now, unemployment. After spending the day with my parents today, I seriously don't know how long they will live. My mom has been simi-diagnoised with leukemia and my dad, whew, there's a slew of issues there. They are both 77.

I feel guilty not being able to pay my debts, but the cc companies didn't seem to care when they hiked up all the fees and lowered the limits, which I was not EVEN close to. My credit score was close to 800 when all this recession stuff started and I wasn't late on my cards and suddenly, across the board, all of the interest rates went up, minimum payments went up and I had to give it up.

Thanks again, and anyone else, feel free to chime in.

[Dst1]

Maybe there are minds more clear than mine tonight but I don't see how on earth one can "expect" an inheritance from someone who hasn't died yet!! If I were in LT shoes I would answer that question with an honest, "no". It seems to me that is the only honest answer unless one of them were to die before the 341. Any other answer is presumptuous.

[LizardTail]

Dst 1,

I just hung up with my mother and she is so breathless she can barely talk. She has a very difficult time remebering things from day to day. On this last call, she has agreed to go and meet with my BK attorney on Monday or Tuesday. On the phone, she said my father was having a severe nosebleed and he couldn't find his medication. As for "expecting" and inheritance, it is quite clear there is an inheritance and it most likely be from both parents directly in the middle of my BK proceeding. Things are very messy right now.

[blessed]

I'm so sorry about your parents LT, that's got to be rough.

[Mensa1]

With the totality of the circumstances it seems short-sighted to enter into a Ch 7. Why put yourself in a position where you would lose control of a rather large sum of cash...?

Why not ask for an advance of funds, (or wait it out) use a professional to settle your cc debt for peanuts, and avoid the risk of worse things happening to you, moving forward. That is what I would do, no questions asked.

Of course it is difficult to make equitable decisions with all the emotions that surround parents who are ill, on top of the other issues. I wish you and your parents well.