Inheritance and Bankruptcy of the Heir – What You Need to Know

Imagine that you’re in the middle of bankruptcy proceedings, and you find out you’ve inherited an inheritance. What happens to that inheritance? What should you know? In this article, we clarify key issues that may arise. According to inheritance law, a person’s death triggers the opening of the inheritance. The inheritance includes all property rights and obligations of the deceased, which makes it significant in bankruptcy proceedings — the process through which the bankrupt debtor’s assets are liquidated. The legal treatment of inheritance in bankruptcy depends on whether the inheritance was opened before or after the declaration of bankruptcy. We explain both situations below.

Opening of the Inheritance After Bankruptcy Declaration

If the deceased dies during the heir’s bankruptcy proceedings, the inheritance automatically becomes part of the bankruptcy estate. The “bankruptcy estate” refers to the entirety of the debtor’s assets from the moment of the bankruptcy declaration. This estate is used — according to the principle of optimal satisfaction — to fulfill creditors’ claims as fully as possible. Under Polish law, it is assumed that the inheritance is accepted with the benefit of inventory, meaning the heir’s liability for the decedent’s debts is limited to the value of the inherited assets.

Excluding the Inheritance from the Bankruptcy Estate

Inheritance is not always purely beneficial — it may include claims, debts, or problematic rights. In such cases, it is possible to exclude the inheritance from the bankruptcy estate. If the inherited assets are difficult to sell or including them in the estate would not be beneficial to the proceedings, the court may rule to exclude them. If that happens, the bankrupt person must independently submit a declaration of acceptance or renunciation of the inheritance.

Opening of the Inheritance Before Bankruptcy Declaration

If the inheritance is opened before the declaration of bankruptcy, two scenarios are possible:

The heir submits a declaration of acceptance or renunciation

If this declaration is made before bankruptcy, it is binding. If the inheritance is accepted, it becomes part of the heir’s assets and enters the bankruptcy estate once proceedings begin. If it is renounced, it is not included in the estate.

No declaration submitted before bankruptcy

If the heir fails to make a declaration before bankruptcy is declared, the inheritance is automatically considered accepted with the benefit of inventory. Any declaration made after the declaration of bankruptcy has no legal effect with regard to the bankruptcy estate (this is known as legal ineffectiveness).

Renouncing Inheritance Before Bankruptcy Declaration

A situation may arise where you file for bankruptcy, but before it’s declared, you learn that a close relative has passed away, leaving behind a significant inheritance (cash, real estate, etc.). Naturally, you may want to protect this inheritance from creditors. Can you simply renounce it without consequences?

Consequences of Renouncing Inheritance for the Debtor

Not necessarily. Article 1024 of the Polish Civil Code states that if the heir (who is bankrupt) renounces the inheritance and this harms creditors, they may petition the court to have the renunciation declared ineffective. Creditors have six months from the date they learned of the renunciation — and no more than three years from the date of renunciation — to file such a claim. This time limit is shorter than the five-year period for a pauliańska action (fraudulent conveyance), which will be discussed in a separate article.

Carefully consider any decision to renounce inheritance, as it may impact creditor protection and lead to legal challenges.

Summary

Inheritance in the context of bankruptcy proceedings can have complex consequences, depending on when the inheritance is opened. Whether accepted or renounced, inheritance must be handled with legal caution to avoid unintended outcomes. Decisions should be informed and guided by an understanding of the legal impact — especially in terms of protecting creditors’ interests.

If you’re uncertain about inheritance and bankruptcy, consult a legal advisor who can help you navigate inheritance and bankruptcy law.

Frequently Asked Questions (FAQ)

Does the inheritance become part of the bankruptcy estate?

As a rule, yes. It is presumed that the inheritance is accepted with the benefit of inventory, meaning the heir is liable for the deceased’s debts only up to the value of the inherited property.

Can a bankrupt person accept an inheritance?

Yes. The bankrupt individual may accept or renounce an inheritance — subject to the timing and legal effects under bankruptcy law.

Can I inherit real estate while undergoing bankruptcy?