ATTORNEY OBLIGATION TO DISCLOSE ASSETS TO COURT

An issue recently arose concerning an attorney's obligation to disclose to the bankruptcy estate that a client's parent died leaving her an inheritance within 180 days from the filing of the bankruptcy.  See a prior blog article.  11 U.S.C. section 541 provides:

Any interest in property that would have been property of the estate if such interest had been an interest of the debtor on the date of the filing of the petition, and that the debtor acquires or becomes entitled to acquire within 180 days after such date—

(A) by bequest, devise, or inheritance;
. . .

(C) as a beneficiary of a life insurance policy or of a death benefit plan.

We concluded under the applicable Rules of Professional Conduct, Va. Sup. Ct. Rules, Pt. 6, Sec 11, Rule 1:6, that we must disclose such an event to the court because (i) our failure to do so would result in a fraud upon the court, unless we immediately withdrew from representation, and (ii) the failure to turn over assets of the bankruptcy estate would amount to bankruptcy crime.

This blog is not intended to render legal services to the reader, including advice about bankruptcy or taxes. Consult with a lawyer concerning the specific application of the law to your unique circumstance.