A bankrupt who transferred his father’s inheritance to his wife to avoid paying tax debts has been handed a six-month suspended prison sentence, it has been revealed.
Appearing before Newcastle Crown Court last week, the Judge heard how Lee David, from Blyth, Northumberland, received more than £33,000 in inheritance from his father’s estate in April 2016.
The 55-year-old, however, was declared bankrupt one month later after failing to pay his taxes and was required, by law, to declare any assets, including the inheritance.
But after receiving the cash, Mr Davis transferred half of the funds to his wife and used the remaining money to pay creditors other than the tax authority.
The case comes after the Official Receiver examined the man’s finance records, finding that he had failed to declare the inheritance, as well as a £1,900 loan.
Pleading guilty to three charges, Mr David was sentenced to six months imprisonment suspended for 12 months.
Commenting on the case, Julie Barnes, Chief Investigator at the Insolvency Service, said: “Lee Davis claimed he did not know he had to tell the Official Receiver about money he had already received and instead hid more than £33,000 that should have gone to the creditors he owed.
“This sentence should act as a warning for others who are considering bankruptcy from hiding or disposing of their assets and that such offences are viewed as serious by the courts and the Insolvency Service.”
Bankruptcy and inheritance: what are the rules?
If a beneficiary is bankrupt their inheritance should be paid directly to the Trustee in Bankruptcy and used to pay off any outstanding debts before being passed to the beneficiary.
Under the Insolvency Act of 1986, bankrupt beneficiaries are also required to declare any inheritance given to them to their Trustee in Bankruptcy, regardless of whether they received the money before or after the bankruptcy restrictions were imposed.
Should a bankrupt beneficiary or Executor of the Estate attempt to conceal inheritance, the Executor of the Estate can also be held personally liable for payments that needs to be made to the bankrupt’s creditors.
For help and advice, please get in touch with Natalie Payne, Senior Associate Solicitor in our Private Client Team at Mackrell.Solicitors today.
Latest posts by Natalie Payne (see all)
- ‘Holographic Will’ thrown out of court after witnessing errors - May 5, 2021
- The seven-year inheritance tax rule, explained - February 22, 2021
- MP calls for bereavement reforms to support grieving families - February 22, 2021