- Cirilli v. Bronk (In re Bronk), Nos. 13-1123 & 13-1516, --- WL --- (7th Cir. Jan. 5, 2014)
- Applying Wisconsin law, the Court reversed the ruling that only account beneficiaries and not account owners could exempt college savings accounts and affirmed the ruling that the annuity in question comprised an exempt "retirement benefit". The Court found that the plain language of the applicable Wisconsin exemption statute provided coverage for any "interest" in the college savings accounts, which included the debtor's ownership interest in those accounts and that this plain language reading both effectuated and complemented other language in state laws on college savings accounts. The Court also found that the applicable Wisconsin exemption statute covered the debtor's annuity because it included a death benefit that brought the annuity within the ambit of a retirement product that provided benefits conditioned on age, illness, disability or death. However, the Court did not reach the question of whether the annuity complied with the Internal Revenue Code as required by the exemption statute because the trustee waived that issue by failing to raise it sufficiently prior to the appeal.
- Procedural context:
- Cross-appeals from decision of the District Court for the Western District of Wisconsin affirming bankruptcy court ruling based on Wisconsin law that held college savings accounts not exempt and annuity fully exempt; issues of statutory interpretation of Wisconsin exemption laws reviewed de novo.
- Debtor filed Chapter 7 after engaging in pre-bankruptcy planning to convert non-exempt equity in home and a certificate of deposit into 529 college savings accounts for grandchildren and an annuity. Chapter 7 trustee objected to the Debtor's discharge under Code § 727(a)(A)(A) on grounds that the transactions comprised transfers with intent to defraud creditors and objected to the claimed exemptions in the accounts and annuity. After an initial appeal, remand, and subsequent ruling, the Bankruptcy Court denied the objection to discharge, but found that the applicable Wisconsin statute on college savings accounts applied only to beneficiaries' interests in plans, not to contributing owners' interests in them. The Bankruptcy Court also found the annuity fully exempt as a retirement benefit under applicable Wisconsin law. The District Court affirmed and cross-appeals followed.
- Sykes, Manion, Kanne
Thelma McCoy v. USA
Summarizing by Craig Geno
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