Expert: Mark J. Markus- California Bankruptcy Attorney - 1/10/2010

Question
I filed bankruptcy in May 2003 in Portland, Oregon.  Shortly prior to filing I received notification that my mother, who died several years before, had listed me ad beneficiary on her life insurance policy. The check arrived before the 341 hearing, and the court tool all of it. It was $3900, including $800 interest that I had to pay taxes on. From your answer to another question it appears they shouldn't have taken anything except the interest. Neither the attorney nor the trustee asked when she died. Can I recover the $3100?

Answer
I'm pretty sure I never said any such thing.  If you were entitled to receive these proceeds prior to filing your bankruptcy case, then that is an asset of your bankruptcy estate and, unless you had sufficient exemptions to cover that asset under applicable state law at the time, then it belongs to the Trustee (assuming you filed a Chapter 7 case).

For more on exemptions, please see http://www.bklaw.com/exemptions.html

As far as the payment of taxes on that, you should discuss that with a qualified CPA to see if you have any kind of offset or something.

http://www.bklaw.com/