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Summarizing by Lars Fuller

Caldwell v. Nelson (In re Caldwell)

9th Circuit BAP Case No. NV-15-1074-JuKiD (Order Published February 24, 2016)
The Ninth Circuit Bankruptcy Appellate Panel ("BAP") reversed the bankruptcy court's ruling sustaining the Chapter 7 Trustee's ("Trustee") objection to Patrick H. Caldwell's ("Debtor") asserted homestead exemption. The BAP concluded that the transfer of title of real property from the Debtor's limited liability company to the Debtor's family trust ("Trust") did not constitute an "interest" that was "acquired" by the Debtor to limit his homestead exemption pursuant to 11 U.S.C. Sec. 522(p). State law protected the Debtor's homestead rights in the real property throughout the various transfers of title. Therefore, the statutory cap of 11 U.S.C. Sec. 522(p) does not apply.
Procedural context:
The Debtor appealed the bankruptcy court sustaining the Trustee's objection to the Debtor's asserted homestead exemption. The bankruptcy court found that the Debtor did not have an ownership interest in the real property during the time in which the real property was titled in the name of the limited liability company wholly owned by the Debtor in order to claim a homestead. The Debtor moved for reconsideration and the bankruptcy court denied Debtor's motion.
The Debtor and his spouse purchased the real property at issue in 1994. Since the real property was purchased, the Debtor and his spouse continuously resided in the real property and maintained monthly mortgage payments, real property taxes and insurance. Over the course of the following years the real property was transferred between the Debtor and his spouse, Caldwell Family, LLC ("LLC"), and the Trust. Each transfer was for no consideration, and pursuant to the Debtor the transfers were for estate planning purposes based on advice from Debtor's financial planner or counsel. Less than 1,215 days prior to the commencement of the bankruptcy the real property was transferred from the LLC to the Trust. The Debtor asserted the real property was exempt pursuant to the state homestead statute. The Trustee objected to the homestead exemption asserting that the maximum amount of the homestead exemption could not exceed $155,675 since the real property pursuant to 11 U.S.C. Sec. 522(p).
Bankruptcy Judges JURY, KIRSCHER, and DUNN

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