Legal Question in Bankruptcy in Oregon

charity

A charity bank account was created to benefit a seriously injured man who lives on SSDI and is filing personal bankruptcy. The account, ''owned'' by the man's friend, pays some of the man's medical bills, rehab bills, and some travel bills. The friend is the only person who can take funds from the account. All funds are gifts or grants from individuals and organizations. None of the man's past earned assets or soc. sec. benefits are in this account.

The man's bankruptcy lawyer says the account must be included in the bankruptcy estate and be disbursed to creditors. This makes no sense to me where the account is not the injured man's property, and cannot be controlled by him. Must the man submit the account funds to bankruptcy authority?

Please advise by email at [email protected]

Please advise.


Asked on 3/21/02, 11:05 am

1 Answer from Attorneys
Joel M. Grafstein Grafstein & Arcaro, LLC

Re: charity

It would appear not to be an asset of the debtor's estate. Either because he has no control over the funds, even how much he would receive, therefore it appears that it is not an asset under Bankruptcy Code section 541. Also, if this is considered a trust, it would appear that it would also be excluded under 541(c)(2) that provides "[a] restriction on the transfer of a beneficial interest in a trust is enforceable under nonbankruptcy law is enforceable in a case under this title." Therefore, can the beneficiary direct that all of the money be released to himself. If not, then it is not an asset. The Chief Bankruptcy Judge for the District of Connecticut, Alan H.W. Shiff ruled along those lines in Sattin v. Brooks (B.V. Brooks), 217 BR 98 (Bankr. D. Conn. 1998).

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Answered on 3/21/02, 8:35 pm


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