Inheritance and bankruptcy

charley_babe

Hi guys,

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sp1987

Is this the same redundancy payment that you wanted to use for a holiday here?

https://forums.moneysavingexpert.com/discussion/comment/39543346#Comment_39543346

It seems you wished to spend some of the redundancy money on a holiday whilst you owed your father £30,000 and other creditors £???. I presume you then paid the £5000 to your father after that post, knowing you planned to go bankrupt?

What advice were you given on this when you spoke to the debt advisory services?

The payment to your father is a clear preference, but you already know that.

Ordering your shopping online may be an option so as to remedy one of the issues with the car. There is always a £10 off your first order offer going with one of the supermarkets for online delivery (Tesco have one currently) and delivery tends to be £3 ish anyway which is often less than the petrol and easily recouped on not buying impulse buys at the store.

Jaxb_2

Firstly you would have been better off putting this in the bankruptcy section but anyway as far as your questions are concerned

1) yes the OR may very well see it a giving preference to a creditor and attempt to reclaim the money.

2) if your father passed away before you are discharged then the OR would claim the money as an asset. If you were to inherit enough to pay your bankruptcy debts and the admin fees for the OR then they could annul your bankruptcy (so it would never have happened) anything left over after this would be yours to keep. If your father passes away after you are discharged (assuming you do not have an IPA, as I think its different if you do) then the money would be yours to keep. Remember though it is based on the date of death not the date of the receipt of the monies.

3) sorry no idea about this one

Culex

charley_babe wrote: »

2. My main issue is inheritance.
As I mentioned, my dad has maybe a year to live. What happens if he dies whilst I am bankrupt and not yet discharged? As I am such a disaster with money, I think he has put any inheritance I am owed into trust fund that I cannot touch for several years until I have grown up a bit. If he dies before the discharge, can the OR demand the money which is in trust?

I am not a lawyer, but I'd rather doubt it, as the trust would be a legal entity of itself. I presume that the terms of the trust would stipulate that you may not get the capital until you have attained the age of 65 years or some other specified age, but that you might get some of the interest or dividends thereon if the trustees agree?

But are you sure your father just didn't want you to squander your inheritance on one splendid holiday?

mel12

1. I owe my dad nearly 30k and in Dec / Feb I repaid him 5k out of a redundancy settlement. Before this I hadn’t made any repayments to my dad in over two years as I couldn’t afford it along with my credit card payments. This upset him greatly and put a major strain on our relationship. He now has a degenerative illness and has maximum of a year to live.
He needs this money to buy a wheel chair and put towards his future nursing care (he will need to go into a private nursing home within a few months). Is there anyway I can get my dad to keep the money? I am sure the OR is going to seize it. They have said that the creditors will view it that I have paid my dad rather than them and they won’t be happy and I should be fair to all of them instead. However, the way I see it is that I paid the creditors for years and didn’t pay my dad a bean so now it’s sort of his ‘turn’. I am not trying to cheat anyone or hide money, I’m just trying to make things right with my dad and repay him what I owe him at a time he needs it most.

2. My main issue is inheritance.
As I mentioned, my dad has maybe a year to live. What happens if he dies whilst I am bankrupt and not yet discharged? As I am such a disaster with money, I think he has put any inheritance I am owed into trust fund that I cannot touch for several years until I have grown up a bit. If he dies before the discharge, can the OR demand the money which is in trust? Also, say I get left more than I owe with the BR would the OR only take what I owed or the whole lot??

I think the OR would reclaim the 5K from your father and be interested in any inheritance (not 100% sure with the trust fund), but theres nothing stopping him rewriting the will to give the money to another family member.

Could you ask him to take the money you owe him out of any inheritance he was planning to give you instead?

skylight

Get your Dad to change his will ASAP. There are many options for him to do with HIS money what he likes. He needs to see a solicitor ASAP. If YOU inherit outright AND he passes during your BR year (before you are discharged), the OR WILL take the money to cover your debts and fees, returning anything thats left. You need to double check that the money is definately in trust and how that trust is set up. He needs legal advice. I cannot stress that enough if he doesn't want his money going to an OR.


As to the debt you owe your Dad. Technically he becomes a creditor along with everyone else. You are not permitted to make any payments to him anymore. (Not officially, anyway). The money you have already paid back; because it is recent the OR will ask him to repay the money. BUT; that doesn't mean he has the funds to repay him. Your Dad needs to tell the OR that repaying them is impossible as the money has been spent on disability equipment and repaying the money that you were legally owed in the first place will leave him in debt. Very sorry but he is not in a position to pay the money.

Ineedaname

sp1987 wrote: »

Ordering your shopping online may be an option so as to remedy one of the issues with the car. There is always a £10 off your first order offer going with one of the supermarkets for online delivery (Tesco have one currently) and delivery tends to be £3 ish anyway which is often less than the petrol and easily recouped on not buying impulse buys at the store.

This does not solve the problem of being able to get to work and visiting seriously ill relatives. The OP is also suffering from a debilitating illness and a car is their only option for getting around. I'm sure the OR will take this into consideration.

dojoman

1, Yes this can seen to be giving preference to a creditor and as the others have said the OR may to try and reclaim the money.

2, As long as it is in a trust prior to your BR, you should be fine, you would also be liable for all the OR fees and expenses as well as your original debt, and these would be substantial.

3, Yes, they would have a claim on it.

As for your car, I was allowed to keep mine due to health reasons, I had to get a Dr`s letter supporting that fact but that was not a problem.

mel12

I did some research on the trust thing, and based on what I found here, I think if you inherit the money in a trust which you can spend once you reach a certain age, the OR would have an interest in it which they would either sell or wait until you are able to spend the money and claim it then even if its many years later [this would apply if your father dies while you are bankrupt or subject to an IPA].

A reversionary interest in a trust is created where the residue of an estate will revert to either the creator of the trust (in reversion) or another person (in remainder) after the determination of a particular estate..... A reversionary interest vests in the trustee, who may take immediate steps to realise it. Although the trustee may not realise the trust property immediately, he/she would be able to do so when that property reverted to the bankrupt, even if this occurred post discharge...An alternative procedure would be to await the expiry of any time period and realise the property itself.

http://www.insolvency.gov.uk/freedomofinformation/technical/technicalmanual/Ch25-36/Chapter31/part5/part2/part_2.htm

Culex

mel12 wrote: »

I did some research on the trust thing, and based on what I found here, I think if you inherit the money in a trust which you can spend once you reach a certain age, the OR would have an interest in it which they would either sell or wait until you are able to spend the money and claim it then even if its many years later [this would apply if your father dies while you are bankrupt or subject to an IPA].

So the options would seem to be that charley_babe either keeps her father alive - on life support if necessary - until after she is discharged, or she persuades her father to alter his will so that the bequest is paid to someone else, such as charley_babe's partner or husband.

skintandfat

I looked into BR and decided against it

I thought of getting my dad to leave my inheritance to my kids (just incase the worst were to happen)

Spoke to a IP and was told that my dad could leave his money to who he wanted

Your only way out is to have the money left to someone else, and hope for the best. Otherwise you have lost it anyway