Bankruptcy and Inheritance

Inheritances are not exempt property.  However, with care, they can be turned into exempt property and protect it.  An inheritance that a debtor is entitled to automatically falls into the bankruptcy estate and is lost.  In addition, if a debtor becomes entitled to receive an inheritance or community property benefit or other particular windfalls within 180 days of the time that the debtor files a bankruptcy, then that inheritance or other windfall will fall into the bankruptcy estate and be lost.  Therefore it is important for debtors to be careful in the filing of bankruptcy in the event that they expect to have an inheritance within 180 days.

Charles Chesnutt