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Payment of inheritance to a person discharged of Bankruptcy

I am an executor of my Mom`s estate. My sister is one of the beneficiaries. She filed for Bankruptcy in Jan 06, my Mom passed away Jun 06, my sisters bankruptcy was discharged in Jan 07. My Mom`s house in Parksville was sold in Dec 07, Tax returns filed in 08 and tax clearance certificate due any day now.
My sister lives in Parksville and bankruptcy was for under $10,000 and inheritance for my sister is approx $25,000 of which $10,000 has been paid to her. Before I distribute the final amounts my questions are as follows:
1. What are my obligations to the trustee – if any?
2. Can I safely distribute the remaining funds?
3. If there is an obligation is it just for the Bankruptcy amount or for what inheritance is remaining?

Posted from: British Columbia

One Response to “Payment of inheritance to a person discharged of Bankruptcy”

A licensed trustee said...

Legally, when your mother passed away any money payable to your sister (the bankrupt) became the property of her trustee. If you have already paid her $10,000 directly and she did not forward those funds to her trustee (even though she has been discharged) she may be in for some trouble.

Similarly, if you are about to pay her more funds then again, she is required to forward them to her trustee.

On the “good” side – if there are sufficient funds to repay her debts in full she may apply to teh Court to have her bankruptcy annulled. Further, if after the debts are paid, any excess funds will be returned to your sister.

Time to call her trustee…