Bankruptcy Law/Estate executor & bankruptcy
QUESTION: I live in Texas. My mother died in February and I am executor of her small estate. My own personal situation has changed drastically and I need to file bankruptcy in the near future. Will this cause a problem as executor of her estate? After selling her $75000 house, I will share any profit with 4 siblings. Also, I am co-owner of her joint checking account. I have this fear of bankruptcy court taking her checking account which doesn't belong to me. I appreciate any info you can give me.
ANSWER: Can you give me an idea of how much you would personally receive from the estate? IF the bank account was set up in joint tenancy then all of it would belong to you--caution here -- if you have a "deal" with your siblings that you'll divide that 4 ways with them DO NOT DO SO until after you have filed bankruptcy.
Let me know the apx amounts in play -- full amt of checking acct on date of death and estimated net distribution on the house.
I probably will have good news for you based on your response. Also -- do you own any real estate or vehicles? If so what is the net equity appx? (value less liens)
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QUESTION: Thanks for such a quick response. Her will stated (and her wishes)everything was to be shared with my 4 siblings. We have already divided a life insurance policy and some stock of which I was listed as beneficiary. The joint checking acct had about $12000 at time of her death, but has decreased as I pay her monthly bills. Net distribution on the house should be around $40000. I own a house with approx $45000 net equity and 2 vehicles, one with $3000 equity and the other with $7000 equity. Thanks again for your help.
When you file bankruptcy there are two types of property in play: 1) property that is yours/owned by you right now OR that you have a right to receive (which sounds like your share of the house) and 2) property that you hold for someone else -- the house is clearly in that categtory and is listed as such in your statement of financial affairs. So estate property would show up 2 places: schedule B as property you have a right to, right now, specific dollar amount; and in the st. of financial affairs -- the entire amount in the estate not yet distributed; don't forget to list as money owed you your estimated share of the estate's house upon sale -- shoot high if anything on this value & exempt.
Property you own or have the right to is listed under personal property, schedule B, and then exempted under schedule C; the tricky part is the estate checking account that's in your name as a joint tenant and the hand-shake deal you've got with your siblings to get 75% to them. That is not a legally binding agreement so the bankruptcy trustee isn't bound by it.
This is why I said do NOT transfer the 75% to them before your bankruptcy creditors' meeting concludes; if you DID that, as it's your money, it would be disclosed, again in the st of fin. affairs as a "transfer" of property of yours made to "insiders" which these relatives are, within the last 2 years, and the trustee could/would go after them for the money back to the bankruptcy estate.
On the other hand, you should have room with Texas' personal property exemption law allowing $60,000 worth of any personal property to be exempted, to claim this as your own, exempt it, and what you do with exempt property after the bankruptcy case is your business.
You can NOT exempt this property that way if you transfer it now and your relatives would be stuck as you can't exempt money the trustee could recover in preference transfers like this.
Your house is exempt in its own right, furniture & wearing apparel are valued at yard sale prices (2500 flat screen tv would yard-sale for $100 for example) clothes seldom add up to more than $500; it is a good idea to get legal advice on this from Texas counsel but from where I'm sitting, you can waltz right through bankruptcy without a problem IF the property is properly scheduled and properly exempted; full disclosure is mandatory as your schedules are signed under penalty of perjury -- if in doubt, disclose.
But I think you're totally ok.
Let me know how it turns out!