Free Rent For A Parent?
By L. Jed Berliner, Western & Central Massachusetts Bankruptcy Attorney on May 17, 2009 in Bankruptcy Practice and Procedure
What could be wrong with this? Your mother conveys her home to you, and you let her live there for the rest of her life. No need to pay an attorney. “Gotcha”, says the trustee.
A bankruptcy trustee takes over control of your assets, and may well threaten to evict your mother so rent can be collected for your creditors. Ouch! What to do?
If the original transaction gave mom a life estate, you’re good. If you need to do one now, you have to wait one year before you file your bankruptcy case. The new life estate transfer, based on the old oral obligation, is a new transfer for an old debt. We call that a preferential transfer, for the benefit of a preferred creditor (mom). A bankruptcy trustee can step into mom’s shoes and take over the life estate.
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