Miami, FL asked in Bankruptcy and Probate for Virginia

Q: Our mother died recently and some of her estate is in probate and they asked us if any of us have declared bankruptcy.

Bankruptcy Record

Filed for Bankruptcy in Il: Reorganization (#1203036) Jan. 30, 2012

Bankruptcy Record

Filed for Bankruptcy in Ny: Liquidation (#0368257) Dec. 8, 2003

How do we find out if there are still creditors looking for payment? We are just interested, I think he should be held accountable for his debt

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3 Lawyer Answers
Richard Sternberg
Richard Sternberg
Answered
  • Probate Lawyer
  • Potomac, MD
  • Licensed in Virginia

A: I don’t understand what you are asking. First off, I don’t understand how “part” of an estate is in probate. All probate assets should be identified in the Inventory. If some of your inheritance is outside of probate in life insurance, funds naming a beneficiary, or joint titles with rights of survivorship, that’s not part of the probate estate, though it may be part of the taxable estate.

If the bankruptcy referenced is the decedent’s, then whatever debts have been discharged in 2003 are gone. You need to consult with the bankruptcy lawyer if your mother was paying off a chapter 11 or 13 when she died.

If you are referring to the bankruptcy of the prospective personal representative, bankruptcy is not necessarily a disqualification from serving, especially a long closed bankruptcy from 2003 or 2012, but the heirs and the court have a legitimate concern about appointing a fiduciary who has needed to resort to bankruptcy. It may be wise to petition for appointment of a Virginia lawyer as co-administrator or co-executor. The lawyer is only permitted to charge for his or her time regardless of whether they are merely the lawyer or also serving as the personal representative.

Bruce Alexander Minnick and Nina Whitehurst agree with this answer

Ross Cameron Hart
Ross Cameron Hart
Answered
  • Probate Lawyer
  • Salem, VA
  • Licensed in Virginia

A: It's a bit complicated: the relevant issues are that if someone dies and you are to inherit from them, your rights 'vest' (are established) at the time of death, not when the estate is distributed. If you file bankruptcy, normally only the assets you have as of the date of filing are considered for distribution to the creditors but inheritance is an exception:

See 11 USC 541(a)(5) which says, in part:  "Any interest in property that would have been property of the estate if such interest had been an interest of the debtor on the date of the filing of the petition, and that the debtor acquires or becomes entitled to acquire within 180 days after such date--

(A)  by bequest, devise, or inheritance; . . . "

So if you file bankruptcy and five months later someone dies leaving you an inheritance, the bankruptcy court could take it for your creditors.

That's why the estate is asking that question. Your 2003 and 2012 bankruptcies shouldn't affect your right to your share of the estate.

Nina Whitehurst and Bruce Alexander Minnick agree with this answer

Robert R Weed
Robert R Weed
Answered
  • Bankruptcy Lawyer
  • Annandale, VA
  • Licensed in Virginia

A: If you declared bankruptcy within 180 days! of your mother's death, you would probably have to notify the bankrutpcy court.

Bruce Alexander Minnick agrees with this answer

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