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Old 04-14-2014, 03:20 PM
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Arrow 1099-C/Insolvency Questions

My husband and I had a short sale last year on a rental condo. The debt was cancelled on April 12, 2013. We are trying to prove insolvency.

Two questions:

1. When completing the insolvency worksheet, do I include 529 accounts as assets?

2. My husband lost his aunt on April 10th (two days before the debt was cancelled). She left him a large inheritance. The insolvency worksheets wants assets "immediately before" the cancellation. Do we need to include the assets his aunt left him since she passed two days before the date of debt cancellation? I'm not sure of exactly when he took ownership of her assets - does this happen immediately after a death?



Thank you in advance for you help!



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Old 04-15-2014, 12:09 PM
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Join Date: Oct 2010
Posts: 5,233
Quote:
Originally Posted by TaxFiler2013 View Post
My husband and I had a short sale last year on a rental condo. The debt was cancelled on April 12, 2013. We are trying to prove insolvency.

Two questions:

1. When completing the insolvency worksheet, do I include 529 accounts as assets?

2. My husband lost his aunt on April 10th (two days before the debt was cancelled). She left him a large inheritance. The insolvency worksheets wants assets "immediately before" the cancellation. Do we need to include the assets his aunt left him since she passed two days before the date of debt cancellation? I'm not sure of exactly when he took ownership of her assets - does this happen immediately after a death?



Thank you in advance for you help!
1. I think that you need an atty.it depends.. In an irrevocable trust, the grantor, you do not retain any form of ownership or control over the assets. Creation of a grantor trust allows you to retain control over the assets, and the trust grantor, you, can revoke, modify or amend the trust at any time.




2. I guess so; If you want to declare insolvency, you have to treat everything you own as an asset. An inheritance received during the period that he is under insolvency will form part of the insolvent estate. However, if the insolvent refuses to accept the inheritance, it will not form part of the insolvent estate (he/she receive nothing if the inheritance is refused).


you need accurate legal help from an estate atty.



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