Type: Amicus
Date: January 17, 2014
Description: Inherited IRA exemption
Result: Judgment Affirmed July 14, 2014
Supreme Court to Decide Inherited IRA Exemption Issue
In other Supreme Court news, the Court granted certiorari in the case of Clark v. Rameker (In re Clark), No. 13-299. In that case, the Seventh Circuit created a split in the circuits when it held that a debtor may not exempt her inherited IRA in bankruptcy. In re Clark, No. 12-1241 & 12-1255 (April 23, 2013). The Fifth Circuit had reached the opposite conclusion in Chilton v. Moser, 674 F.3d 486 (5th Cir. 2012). NCBRC will file an amicus brief on behalf of the NACBA membership in this important case.
Annuity Purchased with Tax-Exempt Rollover Funds Exempt in Bankruptcy
The BAP for the Eighth Circuit found that, under section 522(b)(3)(C), the debtor could exempt an Annuity purchased with funds rolled over from a tax-exempt IRA. In re Miller, No. 13-6026 (Nov. 4, 2013). [Read more…] about Annuity Purchased with Tax-Exempt Rollover Funds Exempt in Bankruptcy
State Exemption Limited to Amount of Equity
The BAP for the Eighth Circuit found that, under the relevant Iowa exemption statute, the debtor could not exempt a vehicle in which she had no equity. In re Goben, No. 13-6039 (Sept. 23, 2013). [Read more…] about State Exemption Limited to Amount of Equity
60-Day Rollover Does Not Disqualify IRA Funds from Exemption
The Fourth Circuit is poised to review the bankruptcy court’s decision that a debtor may rely on the 60-day rollover rule to withdraw funds from his IRA, use them for living expenses, and redeposit them within 60 days without their losing their exempt status in bankruptcy. In re Rudd, 2013 WL 2684541 (Bankr. E.D. N.C., June 12, 2013). [Read more…] about 60-Day Rollover Does Not Disqualify IRA Funds from Exemption
State Exception to Homestead Exemption Pre-empted
The Bankruptcy Appellate Panel for the Eighth Circuit found that a Missouri exception to its homestead exemption was preempted by section 522(c) of the federal exemption scheme. In re Moore, 495 B.R. 1 (B.A.P. 8th Cir. July 8, 2013). [Read more…] about State Exception to Homestead Exemption Pre-empted
Lower Court Sides with “Majority View” with respect to Inherited IRAs
Despite the recent holding to the contrary by the seventh circuit, the court in In re Trawick, No. 12-12581 (Bankr. C.D. Cal. Aug. 29, 2013), held that inherited IRAs may be exempt under section 522(b)(3)(C). Exemptibility is contingent upon two elements: 1) that the IRA has received a favorable determination under IRC section 7805, or is otherwise in compliance with the requirement of the IRC, and 2) that the funds in the account are “retirement” funds. Here, the court noted that there is a split in the circuits as to whether inherited IRAs can ever be exempt, under the second factor, since the debtor himself did not contribute the funds toward his own retirement. See, e.g. Chilton v. Moser, 674 F.3d 486 (5th Cir. 2012); Mullen v. Hamlin, 465 B.R 863 (B.A.P. 9th Cir. 2012); Doeling v. Nessa, 426 B.R. 312 (B.A.P. 8th Cir. 2010) (exempt); In re Clark, 714 F.3d 559 (7th Cir. 2013), petition for cert. filed, No.13-299 (Sept. 6, 2013) (never exempt).
[Read more…] about Lower Court Sides with “Majority View” with respect to Inherited IRAs
NACBA Amicus Filed in Supreme Court Exemption Case
The NACBA membership filed an amicus brief in the Supreme Court case of Law v. Seigel (In re Law), No. 12-5196 (Sept 3, 2013), in an effort to defend the debtor’s homestead exemption against surcharge. In that case, the lower court, ostensibly pursuant to its power under section 105(a), imposed the surcharge to pay trustee fees resulting from litigation necessitated by debtor misconduct. See Law v. Siegel (In re Law), 435 Fed. Appx. 697, 2011 WL 2181198 (9th Cir. 2011). [Read more…] about NACBA Amicus Filed in Supreme Court Exemption Case
Kansas EITC Exemption Constitutional
Despite relentless attacks by the bankruptcy trustees Kansas’s bankruptcy-only exemption scheme, under which a debtor in bankruptcy is permitted to exempt his Earned Income Tax Credit, has once again been deemed constitutional. Nazar v. Lea (In re Lea), No. 12-1297 (D. Kans. Aug. 16, 2013), consolidated with Parks v. Hudson (In re Hudson), No. 12-1298. The exemption benefits low-income families with dependent children by treating the excess of EITC credit over taxes owed as an overpayment of taxes and refunding the difference. [Read more…] about Kansas EITC Exemption Constitutional
Eighth Circuit Rejects State Common-Law Exemptions
The Eighth Circuit found that the Missouri opt-out statute does not permit exemptions that are based on state common law. In re Abdul-Rahim, 12-3448 (8th Cir. July 12, 2013). In that case, the debtors sought to exempt their unliquidated personal injury claim from their bankruptcy estate. The bankruptcy court rejected the exemption because it originated under state common law rather than by statutory enactment. Missouri’s opt-out statute, section 513.427, provides that Missouri debtors “shall be permitted to exempt from property of the [bankruptcy] estate any property that is exempt from attachment and execution under the law of the state of Missouri.” In finding that the state exemptions referred to in that section did not include common law exemptions, the court relied on and felt compelled to follow, In re Benn, 491 F.3d 811 (8th Cir. 2007), which held that under Missouri law, the tax refunds that the debtor sought to exempt were property of the bankruptcy estate and were not exemptible. [Read more…] about Eighth Circuit Rejects State Common-Law Exemptions