Can I Inherit Money in the UK If I’m Bankrupt in the UK?

“Dear Jon,

I was made bankrupt a few months ago and have just lost my mum. She left everything to me in her will which is her house and quite a bit of money as well. I went bankrupt for over 20,000, but stand to inherit much more then this from my mums estate.

Can I keep my inheritance? What is going to happen?”

I am sorry to hear of your loss.

As you are bankrupt, you are obligated to report this financial windfall, or the inheritance, to the Official Receiver handling your bankruptcy, who in turn can take the inheritance for the bankruptcy.

Since the inheritance is more than what the amount you listed in your bankruptcy, or your total amount of debt, once the full amount has been taken for hat you owed, and the Official Receiver’s fees are paid, any amount that is left over is yours and should be returned to you.

I am unsure of a timeline for this as I have heard different reports from people who have gone bankrupt.

This information came to me directly from the government’s insolvency service:

Whether or not a bankrupt or former bankrupt can benefit under the terms of a will would depend upon the date of inheritance. If the money is inherited whilst the bankrupt is undischarged from the proceedings, i.e. the date of death is before the bankrupt is discharged, then the bankrupt has a duty to notify his trustee in bankruptcy of the inheritance and the trustee can claim the inheritance as after-acquired property for the benefit of the bankruptcy estate.

If the money is inherited after discharge, i.e. date of death is after discharge, the inheritance is not a bankruptcy asset and the former bankrupt has no obligation to inform the official receiver or trustee in bankruptcy.

If someone who is made bankrupt knows that they are mentioned in a person’s will they would have no obligation to mention this to the trustee, as it is not an asset until the benefactor dies and, until the date of death, that person has the freedom to change their will as they choose.

I hope this helps.

Jon Emge is an experienced UK debt advisor who has helped thousands and thousands of people in the UK to deal with problem debt. Jon specialises in finding good solutions for problem debt using a variety of UK specific techniques.

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