Personal Bankruptcy Gifts to bankrupt children

[wgraham969]

Both my adult children have hit on rough patches in the past few years, resulting in both of them filing bankruptcies. Sorry, I don't know what Chapter they filed under, or if it even plays in this situation.

Both of my parents passed away in October 2008, less than a week apart. My sister is the executor of both their estates, and I think there will probably be a cash settlement. My desire is to "gift" both children with money from the settlement.

My question is this: how sizable a gift can I pass on to them without drawing undue attention from the bankruptcy court? If I need to spread out the gift over several years, I'm willing to do that, but I'd just as soon provide the gift in a lump sum if possible.

Thanks in advance for any information or opinions you can provide.

 

[dee_dub]

Technically, any gift they receive while in bankruptcy could be seized to satisfy creditors. Whether the bankruptcy trustee thinks gifts below a certain threshold are not worth pursuing is up to them. I would check with the trustee to see what they'll let you do. In my experience, $500 is pushing it.

 

[sfitz]

My understanding is that the review of your assets and debt are reviewed when you file for bankruptcy. Under chp 7, everything is liquidated and debts are removed. Under chp 13, a payment plan for max. 5 yrs is worked out and remaining debts are removed. I don't see how gifts would be liquidated after chp 7 already went through, but you might check with the state and federal statutes to make sure.

 

[wgraham969]

I thought that I had specified--obviously I didn't--the states involved are Ohio and Georgia. My son, in Ohio, filed before the change in Federal law. I'm pretty certain he filed Chapter 7, because he doesn't have any kind of payment plan. My daughter is just filing, in Georgia. Again, pretty sure it's going to be Chapter 7.

Don't know if that makes any difference, or not.