Gifts in bankruptcy

There is a general rule that gifts to family in excess of $200 do not need to be reported in bankruptcy if they were made a year and a day prior to the filing.  That, and other transfers, have fallen under the “year and a day” rule.  That allows someone to do pre-bankruptcy planning, or, transfer assets far enough outside of bankruptcy that they won’t become part of the estate and fall under the control of the interim trustee.  However, the rule is not that simple.  You are required to disclose any transfer of assets made in the two years prior to filing of the case for any purpose outside the “ordinary financial affairs” of the debtor.  Presumably this would exclude normal and regular gifts.  This two year look-back is required in order to enable the trustee or creditors to determine if assets were squandered that could otherwise be used to pay the debtor’s creditors.  If these gifts large enough and outside the ordinary financial affairs of the debtor, a trustee can sue the recipient of the gift to recover it under the theory of fraudulent transfer.  If the gift is large and obvious, it might also be grounds for dismissing the debtor’s entire case under 11 USC 727.  Consult an experienced bankruptcy attorney regarding this.