My mother passed away after I filed for bankruptcy. Does her estate become part of my bankruptcy?

If your mother, father or anyone else passes away and leaves you something within 180 days of your filing for bankruptcy that item may be pulled into the bankruptcy estate for the trustee to pay out to your creditors.  However, you may still be able to exempt portions of it.

Anything that passes by:

  1. Bequest, devise, or inheritance;
  2. As a result of a property settlement agreement with the debtor’s spouse, or of an interlocutory or final divorce decree; or
  3. As a beneficiary of a life insurance policy or of a death benefit plan.

Can be pulled into a bankruptcy estate by a bankruptcy to pay your creditors. The same is also true of insurance proceeds or settlements for accidents that happened prior to the filing of the bankruptcy.

There is also the possibility that the will includes a Spendthrift trust clause that will keep the assets out of your bankruptcy estate. If you are worried that your kids may be forced to file for bankruptcy or get divorced, a spendthrift trust is one way to protect assets. If you have questions talk to a Wills and Trust attorney to go over your options.

Talk to a bankruptcy attorney if any of these things have happened to you, to go over your options.