Expert: Mark J. Markus- California Bankruptcy Attorney - 8/29/2005

Question
My parents live in Riverside County, CA.

Brief background:  My parents both worked for a religious organization.  2 years ago they were terminated and also lost the home the rented from said religious organization.  My mother, a former teacher with CA credentials has tried diligently to get a teaching job since, but because of her experience would cost the school district 2 to 3 times what a teacher right out of college would cost, or 4 to 5 times what someone (not a teacher) with an emergency credential would cost the district.

Long story short, both parents are now on Social Security and live in a mobile home worth about $80,000, but owing about $50,000, so they might have $30,000 equity.  The mobile home is homesteaded.

Because of the loss of jobs with no unemployment (religious organizations are exempt -- an no they were not ministerial, but hourly camp employees), and with the costs of the move from Arizona to California, they ended up running up their credit cards (they owe upwards of $40,000, $50,000, maybe even $60,000) and have had no way to make even small payments due to their fixed income, minus expenses and medical expenses (my dad had a triple-by-pass and heart valve replacement about 2 years ago).

They were about to file bankruptcy, when the little old man my parents cared for died and left them his mobile home (worth maybe $90,000) via a living trust with my father the trustee and both parents sole beneficiaries with no heirs.

Questions:  Since the combined equity of both mobile homes is less than $150,000 (the homestead exemption -- my dad is over 65) is it possible to homestead both mobiles and somehow continue with the bankruptcy?  What if my parents are living apart and my mom is living in one mobile and my dad is in the other, which is what's happened from all the stress?  Would it make a difference if they got legally separated or filed for divorce?

Also, the living trust has not been touched.  Is there some type of time limit by which they have to transfer the inherited mobile home into their names, as sole beneficiaries?  My father says his friend left his mother's living trust alone for like 2 years, then sold the house out of the trust.  Is it possible to sell the home out of the trust with it never passing through my parents' names?

My father is also the trustee, is it possible for him to transfer it into someone else's name or into the name of a corporation?

I'm sorry if I sound a little frantic, but we (I was helping my parents get everything together) were all set to go ahead with the bankruptcy and then this little man died and we're up against the deadline of the big change in bankruptcy law and it's a little overwhelming.

Thanks so much,
Kathy

Answer
I'm going to need to research the issue of splitting the homestead exemptions.  Also, how long have your parents owned each of their respective mobile homes?  If it is less than 1215 days (a little over 3 years), then the maximum exemption they are entitled to is $125,000 thanks to the new bankruptcy laws.  Transferring the assets would be a fraudulent transfer and would be recoverable by his creditors for up to 4 years after the transfer.