Bankruptcy & Inheritances
We recently discovered a family member has filed for bankruptcy. This family member will be due inheritance money when an estate is settled. Unfortunately, one of the executors of the estate has begun some proceedings which will delay disbursement of the estate. We were wondering how much `time` said family member has whereby whe would be discharged from her bankruptcy and thus be absolved of her debt, receiving the inheritance without the Licensed Insolvency Trustee getting all or part of her value in the estate. The actions taken by one of the executors of the will seem `fishy` which leads us to believe the intent is to have said member absolved of her debt first and not having to be responsible for her debt.
Posted from: Ontario
If the bankrupt was named in the will of teh deceased then as soon as they died the bankrupt became entitled to “something”. That something was signed over to the trustee when the person filed for bankrutpcy. It doesn’t matter if it takes 1 month or 10 years for the inheritance to be paid out, it has to be paid to the trustee.
Now, if you know how much the bankrupt is likely to receive they may want to go and speak to their trustee about filing a proposal to cancel the bankruptcy. In the past we’ve had clients offer a large portion of an inheritance as a lump sum to their creditors (by large I mean 90 – 95%). If the creditors accept the offer then the bankruptcy will be annulled (canceled). It’s just a thought… regardless, the inhertance belongs to the trustee not the bankrupt.