My friend Lisa is married to Don in Indiana who is in Chapter 13 bankruptcy before they married. Since then, being married, his 95 yr. old mother died and left him a chunk of coin in a trust to him/Don. They want to put it in Lisa name tucked in a CD.
1. A couple of lawyers told him to put the money (they haven't received yet) when he gets it... put it in Lisa's name in a CD. She of course was not part of his bankruptcy and she is concerned is that going to come back on her or them legally? Could it?
2. Can they (creditors/taxes owed, not paid/anyone) come after this money if it is in her name alone? Is it legal?
3. What would be in her best interest?
1 Answer from Attorneys
Last question first. It would be in Lisa's best interest to be married to a man who honorably faces his obligations. This will help him get into the habit of fulfilling his responsibilities, which may someday be very important for Lisa.
As to the first two questions: I assume Don's Chapter 13 case is still open. If so, then Don needs to advise the bankruptcy trustee about this inheritance, so it can be factored into the plan. Don's bankruptcy attorney will know how this goes. Otherwise, Don could face criminal charges for various sorts of bankruptcy fraud. So could Lisa, if she assists in fraudulently receiving assets. Criminal penalties include up to five years in prison and up to $250,000 fine.
If Don and Lisa had a written opinion from a "couple of lawyers" advising that even though Don has an open bankruptcy case it would be OK to convey Don's inheritance to Lisa, then the U.S. Attorney would probably prosecute the lawyers instead of Don and Lisa. So make sure these lawyers put their advice in writing.
Of course, even if Don and Lisa are not prosecuted by the government, the creditors can still "come after" the money.
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