A mess...a will, divorced parents, declined inheritance and my BK. need advice

[Icyshades]

Long story short, my dad died and I am not in his will, and to my knowledge, it's been that way for years. I filed a Ch 7 BK last winter, and it was discharged in April '12. My dad passed away a couple days afterwards, unexpectedly.

Today, my mom called to say that even though I was not in his will, that because of the fact that she and he were divorced, that if she doesn't decline her 50% she of his estate, she would have to pay a lot of money as a "non-relative". She said that means that under her state laws, it would mean that we, as the grown kids, would automatically get 20% shares, by her declining her inheritance.

I could find info on the internet that said that because there was less than 180 days between filing and death, that any inheritance that i might have the right to, would normally go to the trustee, but don't know what rules, if any will apply, being that I truthfully said "no" when asked at the 341 if I had any inheritance coming. I know she thinks she is doing the right thing by passing her share onto us kids, but my father was never fair or even with any of us kids, and he had willed his money to the two he thought were struggling the most. I asked if the funds could just be divided among my siblings, but she said the state determines that it gets divided equally between all siblings as soon as she rejects her share. My family isn't close, but my guess is that we would each be getting less than $5k. Right now, we are passed the 180 days since my filing and subsequent dismissal.

My BK attorney is on vacation, and this is going to stress me until he returns! The whole situation is twisted, and I don't know what rules apply. Thoughts? Just when I thought the BK had relieved me of life's stresses, this pops up!

[LadyInTheRed]

Welcome to BKforum.

Unfortunately, the law is that if you become entitled to an inheritance with in 180 days of filing, it is part of the BK estate. If you can't exempt it, the trustee can take it. If your case has been closed, I believe it would have to be reopened in order for the trustee to administer the asset. The trustee could decide it isn't worth the trouble.

I'm not sure when you are considered to become entitled to an inheritance that you received because of a disclaimer. Is it the date of death or the date your mother signs a disclaimer?

Be prepared to give up the inheritance, but don't give up hope that you may get to keep some or all of it. Don't get too stressed. Up until today, you didn't think you were getting anything.

[justbroke]

First, as a person who lost their father as well, I am sorry for your loss.

It is based on when you became entitled to the inheritance. Since a couple of days after (a normal) discharge is well within the 180-day requirement (found in 11 USC 541), then it would be property of the estate. You would need to inform your attorney and your attorney would contact the Trustee. The Trustee will decide whether to re-open the case in order to administer newly discovered assets.

As for the stress... if you don't really care about the money, there is no stress. This does not affect your discharge at all; unless you don't notify your attorney and the Trustee finds out later! In any event, you would not need to do much of anything, other than providing your attorney with the details and the attorney notifying the Trustee. Should the Trustee pursue this, then the Trustee would do most of the legwork.

I would not stress about this, especially if the money was unexpected, and the inheritance appears to be "liquid" cash. I hope you find a little relief provided by my response.

[justbroke]

(Wow, LadyInTheRed responded right as I posted!) Along what she wrote, regarding the disclaimer by your mother, I wonder if you would be able to do the same thing? It would get complicated and may irritate the Trustee, but that could be available to you.

Otherwise, as we both wrote, if you weren't expecting this money and it doesn't otherwise cause problems... just let the Trustee do their thing. The Trustee may not even do anything.

I do like the exemption question. Did you utilize Federal or State exemptions?

[Icyshades]

I used state exemption, and I believe there is still some wiggle room in that area. I had already let my house go, owned a car worth $4k or so, and have minimal furniture. My second car is upside down by about $1,500, but I reaffirmed out of necessity, as my kids share a car and are commuting to college daily.

If there is a way for me to disclaim, as you pointed out, I wonder if my share would then go to my kids? From what I have read, the day you reject the inheritance, it is treated as if you died before the person who had the will.

[tobee43]

I used state exemption, and I believe there is still some wiggle room in that area. I had already let my house go, owned a car worth $4k or so, and have minimal furniture. My second car is upside down by about $1,500, but I reaffirmed out of necessity, as my kids share a car and are commuting to college daily.

If there is a way for me to disclaim, as you pointed out, I wonder if my share would then go to my kids? From what I have read, the day you reject the inheritance, it is treated as if you died before the person who had the will.

if you were not named in the will and your mother has the right to decline, you do as well. i would take this question to the estate atty first and NOT the bk . so, since you were never named this was not within the 180 days since you are not listed there. it's almost like you are getting this as a result of default. that's a bit different than being actually entitled.

see if they can by pass you completely and go directly to your children. it should be able to happen since you were not listed in the actual will. also is this a will or a trust??? because if it's a trust there are many ways around this, but if it's a will it's a different story.

if there is NO estate atty, see which firm drew up the will and i would call them. best of luck to you and so sorry for your loss!

[despritfreya]

This is not as simple as one would think. As we sit here today, Icy IS NOT entitled to anything as Icy is not named in the will. Icy may (and I stress the word "may" as this turns on State law) be entitled to an inheritance if and when the named beneficiary (mom) renounces her right to the distribution. If my interpretation is correct and the right to the distribution is controlled by mom, then if mom holds off renouncing her inheritance for 181 days after Icy filed then it would be outside of the scope of "property of the estate".

Icy needs to discuss the timing issues and whether or not there is an "inheritance" for the purpose of 11 USC 541(a)(5) not only with bk counsel but also with a good probate attny especially if mom holds off renouncing her right to take the distribution.

Des.

[tobee43]

This is not as simple as one would think. As we sit here today, Icy IS NOT entitled to anything as Icy is not named in the will. Icy may (and I stress the word "may" as this turns on State law) be entitled to an inheritance if and when the named beneficiary (mom) renounces her right to the distribution. If my interpretation is correct and the right to the distribution is controlled by mom, then if mom holds off renouncing her inheritance for 181 days after Icy filed then it would be outside of the scope of "property of the estate".

Icy needs to discuss the timing issues and whether or not there is an "inheritance" for the purpose of 11 USC 541(a)(5) not only with bk counsel but also with a good probate attny especially if mom holds off renouncing her right to take the distribution.

Des.

yes, this is the way i see it as well. estates can be a sticky situation! i think there is a "legal" way out here thanks des!

[despritfreya]

if. . . your mother has the right to decline, you do as well.

Tb,

You and I are thinking along similar lines, however, depending upon State law, the moment mom renounces, Icy steps into her shoes. If, on that moment, the inheritance is property of the estate, Icy has no authority to decline the distribution as Icy does not control the asset (assuming we are within the 180 days).

Des.

[tobee43]

i was also wondering if the father died in testate, as i'm wondering why an ex would be entitled to 50%...and maybe the state is taking the other 50. just speculation which; sorry Icy, you would know and understand the details much better than i. i know some people leave their property to ex's as well, just not a usual happening in most cases i have seen. (again, not suggesting it's unheard of).

[daveinIL]

Tb,

You and I are thinking along similar lines, however, depending upon State law, the moment mom renounces, Icy steps into her shoes. If, on that moment, the inheritance is property of the estate, Icy has no authority to decline the distribution as Icy does not control the asset (assuming we are within the 180 days).

Des.

I would think that once the mom renounces, it does not immediately revert to Icy. It would then go into some sort of "open" state where the State would have to do their due diligence before there would be any kind of distribution. My experience with "undefined" estates would lead me to believe this would be on the order of months for a trivial estate and years for an extensive one.

[tobee43]

Tb,

You and I are thinking along similar lines, however, depending upon State law, the moment mom renounces, Icy steps into her shoes. If, on that moment, the inheritance is property of the estate, Icy has no authority to decline the distribution as Icy does not control the asset (assuming we are within the 180 days).

Des.

got it, so it really depend on that's state law. i got it. however, if there are other siblings or other family, why, if that would be within the limits of that's state law, would the OP have no rights of refusal of the estate assets?

[justbroke]

At least this is not intestate and would have probate issues all over it; been there, done that. I agree that it is when the debtor became entitled to the inheritance, but that is the core question.

[spidge]

So she just became aware that she may be entitled to an inheritance after the 180 day mark? Did I read that wrong? Seems she does not have to tell the trustee diddly.

[tobee43]

At least this is not intestate and would have probate issues all over it; been there, done that. I agree that it is when the debtor became entitled to the inheritance, but that is the core question.

i'm not certain about that? only because why would the call be made to OP yesterday, it could have been in probate and this was the probates courts resolve? so OP, this is such speculation on my part, i'm sorry if i'm reading far more into your situation