When an estate is transferred as heir property, beneficiaries are required to pay inheritance, or “death taxes” However, current federal inheritance tax laws allow individuals to give up to $1,050,000 to heirs without incurring an estate tax; therefore, most heir property is estate tax free. States generally follow the leading of federal laws in imposing an inheritance tax on beneficiaries; however each state’s laws may differ slightly. Beneficiaries should consult with a bankruptcy attorney to determine the amount of tax and familiarize themselves with the laws of their resident state.
According to federal inheritance tax laws and U.S. bankruptcy codes, a beneficiary who has filed for consumer debt protection must willingly report an inheritance after bankruptcy to the trustee as part of the estate. In addition to liquidating debtor estates to pay creditors, trustees are charged with the responsibility of locating all disposable income and assets. Inherited assets are distributed using an attorney and legal instruments, usually the decedent’s last will and testament. Once a will has been probated, a procedure which determines its validity, it becomes part of the public record — fully accessible to all beneficiaries, Chapter 7 trustees and creditors. Although it may take months and sometimes years to settle a decedent’s estate, once a debtor receives assets left to him, federal inheritance tax laws mandate that money and property be turned over to the courts for distribution to pay unpaid debts. Attempting to hide an inheritance after Bankruptcy constitutes concealment of assets, a federal charge of bankruptcy fraud, punishable by imprisonment.
Those individuals who receive an inheritance after they file for bankruptcy, either Chapter 7 or Chapter 13, should seek legal counsel from a qualified bankruptcy attorney to determine how additional assets of money or real property will be handled. When cash-strapped consumers come into large sums of money, it can be a cause to celebrate or cry. Federal inheritance tax laws prohibit debtors from concealing assets, including monies or property legally and rightfully willed to them. The irony is that if the inheritance had been awarded prior to making the decision to file, the debtor may have had sufficient assets to cover outstanding debts. Nevertheless, it’s a case of too little, too late and now the courts have the last word.
Chapter 7 bankruptcy or Chapter 13 bankruptcy , is a legal means of providing consumer debt protection for individuals seeking relief from overwhelming financial woes. Without proper monetary management and sound financial planning, anyone is subject to filing bankruptcy . Unless an individual has a contingency fund, an unexpected illness, chronic unemployment, or credit card abuse can all push a consumer over the edge and into bankruptcy filing. U.S. Bankruptcy law does not strip an indebted individual of all assets, but there are some concessions that have to be made to satisfy creditors. The law allows debtors to retain Social Security payments, VA benefits, unemployment compensation and certain property deemed exempt by the court. However, when it comes to an inheritance after bankruptcy or other windfall gain, the courts will exercise the right to legally seize additional income to fulfill debtor obligations. When in this situation get counsel to try and protect your new assets.
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To know more about how bankruptcy attorney help in Chapter 7 and Chapter 13 bankruptcy when an inheritance is involved.Resources:http://www.diy4law.com/what-is-bankruptcy.phphttp://www.diy4law.com/what-is-chapter13-bankruptcy.php