Bankruptcy in Califonia

[Dradonus]

Hey, guys. New to the site. I am an Insurence Only Producer and been selling FIA's for four years now. However, I came across something I do not know.

I have clients that are claiming their Mother's FIA. They want to roll it over, only, the daughter is in the middle of a California Bankruptcy. I know in the state of Arizona, everything would be peachy. But I do not know California Law.

Can someone know what the law states on inheritance money, Annuities, Inherited IRA's, and Regular IRA's for California?

She is in the middle of a chapter 13. Forgot to put that.

 

[DHK]

Little to no creditor protection in California.

 

[walthamny]

If the daughter is in chapter 13 bankruptcy, any asset she receives has to go the the trustee first. Inheritance, lottery etc. When you sign a chapter 13 plan, you agree to disclose all inheritances during the bankruptcy and plus 1 year after discharge. If you don't disclose, It is a felony and also if they find out you will have the bankruptcy dismissed all together.

 

[Dradonus]

Ahh, This sucks. I have another way of doing things, it is just undesirable. Thanks for the info!

 

[walthamny]

DOn't try to give advice on how to hide assets from the trustee. If you are thinking about using someone else as a beneficiary and then transferring the funds after the chapter 13 is over, you could lose your license.

Financial advisors can give advice prefiling and there are ways to structure your affairs before filing, however, once a chapter 13 is filed, US Trustee takes over. Anything financial needs their approval. You can sell term insurance to people during the chapter 13 but even that needs approval. I have quite of few clients who are bankruptcy lawyers so I know plenty of cases like yours that don't have a happy ending.

It is a chapter 13 case so your client has assets, it is not too difficult for the trustee to cross check your clients relatives and search for any probate filings or death notices. Most US bankruptcy trustees are experienced attorneys, they have seen all sorts of tricks. Any money they find goes against their fees anyway.

 

[Dradonus]

Technically, at the current moment, the trust owns the money. So the trustee can hold the money until maturity, which by then, chapter 13 will be done. I am talking to their bankruptcy attorney about it, and that is most likely the best case scenario.