Inheritance while in Chapter 7 help please

[my2girls]

Hi All,
Unfortunately we had an unexpected death in the family. I guess as they say when it rains it pours.

I believe we were asked about any inheritance at our 341 we stated "no" as we were not expecting any inheritance (death happened suddenly yesterday). From what I've been reading online we need to report this to the trustee and any amount (we have absolutely no idea how much) must be turned over and we get nothing if its within the 6 month 1 day period of filing.

Are there any exemptions/exceptions that would allow us rights to any of the $$? It would be nice to have any amount to put away for emergencies. We aren't talking hundreds of thousands of dollars here.

Also, hypothecially, what if the amount of the inheritance exceeded the amount of debt discharged. Are we entitled to the overage amount or are we out of luck?

[despritfreya]

My condolences on your loss.

Be careful - the timing of the receipt of the inheritance is not the issue. The fact that the death happened within the 6 month window is. A will speaks upon death. If you are a beneficiary of the will then the timing of the probate is not relevant. What is relevant is whether or not it is an "inheritance" as opposed to you being a beneficiary of say a family trust. There is a ton of case law out there that distinguishes between what is and what is not an "inheritance" under the Code. If you are entitled to something under the Last Will & Testament, then that definitely belongs to the Trustee. If your right to property stems from something else then maybe it is not something that the Trustee can grab. You need to talk to your attorney once you find out what is going on. If you do not have an attorney now would be a good time to find one.

The ability to claim an exemption will depend upon whatever exemption statutes you can utilize, be it federal or state. If, what the Trustee can recover exceeds all of the claims filed in your case, the balance will be returned to you.

Des.

[ValleYum]

Oh, my2girls, I am so very sorry for your family's loss. Your family will be in my thoughts over the coming days.

Take care of yourself, too.

[HHM]

Unless your state has some sort of wild card or cash exemption, the answer is no, there is no exemption. And the timing is as desp points out, 180 days from the event that gave rise to the right to receive the inheritance (i.e. the death of the sibling). Hate to say it, but you need to inform the trustee and kiss that money good bye. If you don't inform the trustee, and the trustee finds out, you risk your discharge for concealing assets. The trustee could revoke and deny your discharge, and still take the money. Denial of discharge means that all the debts included in your BK are not discharged and your stuck with them, forever. However, before contacting the trustee, make sure you understand how you are entitled to the inheritance. (i.e. if the will sets up a trust or there is a generation skipping trust, maybe this is all a non-issue).

On your other questions, if the inheritance exceeds the debt, you get the difference.

Finally, let's keep this issue in perspective, sure, it would be great if you could have your cake and eat it too. But let's say you didn't file BK and received this inheritance, you would, most likely, be using the money to pay the debt anyway.