Legal Question in Bankruptcy in Wisconsin

Bankrupcy and Inheritance, Are Inherited Funds Exempt?

You need to retain an experienced bankruptcy lawyer who is also knowledgeable of the 2005 bankruptcy "reforms" ASAP. Inherited and gifted property received either prior to filing or within six months after filing is not exempt ("exempt" meaning something which you can retain) in a chapter 7 bankruptcy, unless the value falls within the limits of "wildcard" type exemptions. The federal wildcard is currently around $9K of the unused portion of your federal homestead exemption, so you may be able to protect some of it in this fashion. There may also be lawful "pre-bankruptcy planning" techniques from which you could benefit. Finally, a chapter 13 bankruptcy could assist anyone with non-exempt process, since it allows the debtor to retain control of all assets regardless of whether or not they are exempt, so long as creditors are getting at least as much in your chapter 13 as they would have gotten in chapter 7. In chapter 7, all non-exempt assets would go to the trustee for the benefit of creditors. This is known as the "best interest test." Simply being in the will or other possible future beneficiary of someone who has not yet died is not an asset of the bankruptcy estate, hence not something which should be of much concern unless death of the donor is eminent. Possible future gifts are likewise not subject to seizure by the trustee unless they have somehow become irrevocable completed gifts.