deed of variation then bankruptcy

thousandyard1

i am about to go bankrupt. i have been left 30 k in my mother's will (which is the amount i owe to creditors) and am trying not to lose it. so my idea is to do a deed of variation resulting in my not inheriting. anyone know why this might fail ? i realise id have to be dishonest in my dealings with the OR by saying im not set to inherit etc.
thanks.

loubel

I have no idea whether the OR could overrule a deed of variation (but agree with you it would be a dishonest way to avoid paying off a debt), but I see no benefit to you to entering one...
Surely it's better to inherit and use the money to clear your debts than not to inherit and to go bankrupt?

silvercar

Why not make full and final offers to clear all the debts, that way you might be left with some money at the end.

Would you be allowed to go bankrupt with 30k in the bank?

thousandyard1

i have to go bankrupt this month but wont inherit the money until may / june (otherwise i would use it to pay my debts off). just wonder if the OR checks to see if yur parents have recently died etc to determine whether you might have been lefet some money in a will. silvercar, im wondering if once you achieve full and final offers as soon as you have the cash you have to pay off in full ?

loubel

I'm pretty sure you have to disclose the inheritance, even though you haven't physically got the money yet.

Do you know for sure when you'll be getting it? If your creditors knew about it would they give you an extended grace period to avoid having to go bankrupt?

FraudBuster

Be aware that the maximum penalty for lying on your bankruptcy petition is seven years in prison.

silvercar

thousandyard1 wrote: »

i have to go bankrupt this month but wont inherit the money until may / june (otherwise i would use it to pay my debts off). just wonder if the OR checks to see if yur parents have recently died etc to determine whether you might have been lefet some money in a will. silvercar, im wondering if once you achieve full and final offers as soon as you have the cash you have to pay off in full ?

The executors or the solicitors have an obligation to check for bankruptcy before paying any money to beneficiaries.

So by going bankrupt first the OR would just take all the money to repay your creditors. By making F&F settlements first, you would have a chance of money left over. The clue is in the wording - FINAL, so there would be no comeback. Haven't a clue whether they would ask how much money you have and the total size of your debts, normally someone like a spouse or relative makes an offer to pay off the debt in a one-time-offer; not sure how much negotiating power you have if you offer the money yourself. Of course if you are not bankrupt you could do a deed of variation and change the beneficiary to X who could pay off your debts.

thousandyard1

surely if i do a deed of variation before going bankrupt the executors would just pay my brother the total and whether i was bankrupt or not would not matter ?

tigerfeet2006

Nope! the OR will look at the day your mum died and the fact that the money was gifted straight to you is what the OR will look at. Any fiddling you try to do the OR will reverse it and claim the money from where ever you have tried to hide it.

loubel

The problem is that the purpose of the deed of variation is to allow tax efficient changes to be made to an estate post-death and I am not certain that it has any legal affect on anything else.

If the OR considers that you are just giving away the money in order to avoid being included in your bankruptcy this would (I gather) be taken very seriously and as Tigerfeet says, he will trace and claim the money back.

skylight

You cannot do a deed of variation when you are insolvent (or the money would go to the BR estate). Under BR circumstances you cannot refuse to be a beneficary. In fact you wont get the money anyway as the executors are obliged to search the beneficaries anyway.

I assume by the words used that your mother has already passed away? I am sorry for your loss, but if you go BR now, there is no way you will be able to keep, refuse or defer the money.

If £30k is what you owe, you should be able to offer your creditors full and finals to perhaps half that value and therefore never have to go BR in the first place and all the hassle that comes with it.