Modem bankruptcy law uses the date of the bankruptcy petition as a hypothetical "line of cleavage," dividing prepetition assets, which flow into the bankruptcy estate for distribution to prepetition creditors, from postpetition assets, which belong to the debtor. Thus the date of the petition marks a "fresh start" for the debtor. However, the Bankruptcy Code makes an exception to the "line of cleavage" for inherited assets: Any right to an inheritance arising up to six months after the date of the petition pours back into the estate, and is available to satisfy creditors' claims.
Professor Hirsch argues that the six-month window is an ill-advised rule that should be repealed. He examines the rationales for the rule set forth in its legislative history-protecting creditor reliance, promoting the policy behind the discharge, and preventing abuse by debtors-and shows that the six-month window fails to adequately address any of the problems it was purportedly enacted to solve.
The author next examines the six-month window from a perspective not considered by the bankruptcy law draftersthe intent of the testator-and argues that the six-month window in fact runs counter to the presumed intent of most testators to withhold their wealth from their beneficiaries' bankruptcy estates. The Article concludes with some observations about the nature of bankruptcy law that could allow such an unwise rule to creep into the Code.
Adam J. Hirsch,
Inheritance and Bankruptcy: The Meaning of the "Fresh Start",
45 Hastings L.J. 175
Available at: https://repository.uchastings.edu/hastings_law_journal/vol45/iss2/1