Post-petition inheritance disclaimer was avoided. The Debtor’s mother died on June 27. 2006, and the debtor filed her bankruptcy petition on September 29, 2006. On November 3, 2006. the Debtor. who was executrix of the probate estate, filed a disclaimer of the inheritance she was to receive. The Trustee then sought to avoid the purported disclaimer as an unauthorized post-petition transfer under §549. The Debtor countered that under Fifth Circuit and Texas law the disclaimer related back to the date of death, and therefore did not occur post-petition. ln re Schmidt. 362 B.R. 318 (Bkrtcy.W.O. Tex. 2007).
Finding for the Trustee, Judge Clark followed In re Farrior, 344 B.R. 483 (Bkrtcy. W.O. Va. 2006), which held that federal pre-emption trumps a Debtor’s ability to employ if state law disclaimer as to property designated by federal statute (§54I) as property of the estate. The Court distinguished Simpson v. Penner 36 F.3d 450 (5th Cir. 1994) which involved a pre-petition disclaimer. However Judge Clark questioned whether Simpson was still good law, as it pre-dated Drye v. United States 528 U.S. 49 (1999), where the Supreme Court ruled that a state-authorized disclaimer of inheritance could not defeat attachment of a federal tax lien to the taxpayer’s beneficial interest in the inheritance prior to execution of the disclaimer. The Court also cited Matter of Burgess, 438 F.3d 493 (5th Cir. 2006) (en banc) as further authority that Simpson no longer applies. In Burgess. the Fifth Circuit held that a subsequent event (passage by Congress of a crop disaster relief bill) could not be used to revise a state of affairs that existed on the date of the bankruptcy filing. In this case the inheritance was property of the es tate on the petition date, giving the Trustee dominion and control over it, not the Debtor. Even if the Fifth Circuit did not find Drye persuasive, Judge Clark was certain that the Circuit Court would not permit a post-petition disclaimer to be effective. Post-petition inheritance disclaimer avoided.
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