Inheritances are subject to creditor and trustee claims while you are in bankruptcy. That’s because when you file for bankruptcy, the trustee takes control over all of your property – including any inheritance you have a right to within180 days after he files his petition. You don’t even have to receive the property within 180 days; it is only necessary that you become entitled to receive the property within 180 days of your petition.

In the case of Alford v. Reed, 2005 U.S. Dist. LEXIS 19024 (N.D. Tex. Sept. 2, 2005). a husband and wife filed a Chapter 7 Bankruptcy. Shortly after filing bankruptcy the wife inherited nearly $170,000 from her mother. The wife decided not to accept her portion of the inheritance and gave her gift to the other beneficiaries.

The trustee sought a transfer of the property claiming it as property of the estate. The court determined that the gift fell to the bankruptcy estate upon the mother’s death and not to the wife personally. Therefore, the wife could not disclaim the property. So, the trustee was allowed to distribute the $170,000 to the couple’s creditors even though the wife never received the gift and even though she tried to refuse it.