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Deceased Spouse / Means Test
I think I'm feeling kinda proud of myself - I started this thread,
and since it has gotten a lot of play, I feel like I finally asked a
decent question! Now I'm coming back to it to follow up on a couple
of points.
First, with my prospective client, spouse passes away. Surviving
spouse is to receive benefits, policy is $100,000. At one point in
the thread below, David said "probably not exempt." I don't
understand. 704.100 says (as I refer to my new cdcbaa Bankruptcy
Reference Book, thank you very much!):
(c) Benefits from matured life insurance policies (including
endowment and annuity policies) are exempt to the extent reasonably
necessary for the support of the judgment debtor and the spouse and
dependents of the judgment debtor.
703.140(b)(11) says: the debtor's right to receive, or property that
is traceable to:
(C) a payment under a life insurance contract that insured the life
of an individual of whom the debtor was a dependent on the date of
that individual's death, to the extent reasonably necesary for the
support of the debytor and any dependent of the debtor.
I quoted both because this case could fit within either 703s or 704s.
OK, in my situation, clearly needed for support, as without the
deceased spouse's contribution, surviving spouse and son are up the
creek. Moreover, at least with regard to the 703 provision, it would
seem as if the proceeds are exempt either as the right to receive
them, which she has now, or as funds in an account if she had already
received them.
What am I missing? The exemption part seems safe to me.
On a more global level, to answer both David and Elmer's question as
to why she file if she has this coming, wouldn't the answer be
because this way she can get rid of the enormous credit card and
medical debt, and keep the proceeds to support her and her son
through what is going to be a difficult time? Wouldn't that be one
of the reasons such an exemption is in place? How does this really
differ from say a pension which could also ostensibly be used to pay
off creditors but is exempted all the time?
wrote:
>
> worker's comp not necessarily equal to disability insurance
>
>
> David A. Tilem
> Certified Bankruptcy Specialist*
> Law Offices of David A. Tilem (a debt relief agency)
> 206 N. Jackson Street, #201, Glendale, CA 91206
> Tel: 818-507-6000 Fax: 818-507-6800
>
> * Bankruptcy specialist cert. by State Bar of CA Bd of Legal
Specialization.
> Business bankruptcy specialist cert. by Amer. Bd. of
Certification
> -----Original Message-----
Behalf Of Elmer Martin
> Sent: Monday, January 26, 2009 4:53 PM
> To: cdcbaa@yahoogroups.com
> Subject: Re: [cdcbaa] Deceased Spouse / Means Test
>
>
>
>
> In this context, someone just flashed a 9th Circuit decision a
couple days old on the listserver which held that disability
insurance is included in disposable income. This is of interest for
a number of reasons. I'm in the process of reviewing and finalizing
the articles for the next issue of the California Bankruptcy Journal
which is devoted solely to individual Chapter 11's and the concept of
disposable income is very important in that context. One author has
raised it to constitutional significance, although that is not a
raising with which I agree.
>
> Elmer Dean Martin III
> P. O. Box 4670
> Diamond Bar, CA 91765
> 909 861 6700
> elmer@bankruptcytax .net
>
> Sent: Monday, January 26, 2009 4:07 PM
> To: cdcbaa@yahoogroups. com
> Subject: RE: [cdcbaa] Deceased Spouse / Means Test
>
>
>
> I agree with Elmer in several respects and repeat my earlier
comment.
>
> Cash received is cash received to be included in the means test.
Where the policy has yet to pay out, it is an asset, not cash
received. It belongs on B, not on I. It is probably not exempt.
>
> Why would this debtor want to file if she has life insurance money
to pay claims?
>
> Right to receive money from policy VESTS on death of insured.
>
> As for Elmer's question, benefits derived from the Soc Sec Act are
NOT included for means test purposes. I am not sure if the worker's
comp benefits referenced in Koch are derived from the Soc Sec Act or
not. But even if they are excluded from the means test and
eligibility for Ch 7 issue, they are nonetheless included in the
Chapter 13 plan confirmation analysis which requires a debtor to use
his/her/their best efforts to repay creditors.
>
> David A. Tilem
> Certified Bankruptcy Specialist*
> Law Offices of David A. Tilem (a debt relief agency)
> 206 N. Jackson Street, #201, Glendale, CA 91206
> Tel: 818-507-6000 Fax: 818-507-6800
>
> * Bankruptcy specialist cert. by State Bar of CA Bd of Legal
Specialization.
> Business bankruptcy specialist cert. by Amer. Bd. of
Certification
> -----Original Message-----
Behalf Of Elmer Martin
> Sent: Tuesday, January 20, 2009 9:41 PM
> To: cdcbaa@yahoogroups.com
> Subject: Re: [cdcbaa] Deceased Spouse / Means Test
>
>
>
>
> I don't understand this thread. If the surviving prospective
debtor spouse has the prospect of getting life insurance proceeds,
why is she filing? Something rocks my boat about insurance proceeds
being disposable income. Is the following, for instance, still good
law?
>
> In Re: Eugene Wayne Koch, Debra Marie Nelson-Koch, Debtors. Barbara
G. Stuart, United States Trustee, Appellant, v. Eugene Wayne Koch,
Debra Marie Nelson-Koch, Appellees.
>
> No. 96-1541
>
> UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT
>
> 109 F.3d 1285; 1997 U.S. App. LEXIS 6162; Bankr. L. Rep. (CCH)
P77,318; 37 Collier Bankr. Cas. 2d (MB) 1320
>
> November 20, 1996, Submitted
> March 28, 1997, Filed
>
> SUBSEQUENT HISTORY: [**1] As Corrected April 1, 1997. As
Corrected April 3, 1997.
>
> PRIOR HISTORY: Appeal from the United States District Court for the
District of South Dakota. CIV 94-4265. Honorable Lawrence Piersol,
District Judge.
>
> DISPOSITION: Reversed.
>
>
> CASE SUMMARY
> PROCEDURAL POSTURE: Appellant challenged a judgment of the United
States District Court for the District of South Dakota that affirmed
a bankruptcy court's denial of his motion to dismiss appellees'
bankruptcy proceeding as a "substantial abuse" under 11
The post was migrated from Yahoo.
charset="UTF-8"
worker's comp not necessarily equal to disability insurance
David A. Tilem
Certified Bankruptcy Specialist*
Law Offices of David A. Tilem (a debt relief agency)
206 N. Jackson Street, #201, Glendale, CA 91206
Tel: 818-507-6000 Fax: 818-507-6800
* Bankruptcy specialist cert. by State Bar of CA Bd of Legal Specialization.
on
lmer Martin
Sent: Monday, January 26, 2009 4:53 PM
To: cdcbaa@yahoogroups.com
Subject: Re: [cdcbaa] Deceased Spouse / Means Test
In this context, someone just flashed a 9th Circuit decision a couple days old on the listserver which held that disability insurance is included in disposable income. This is of interest for a number of reasons. I'm in the process of reviewing and finalizing the articles for the next issue of the California Bankruptcy Journal which is devoted solely to individual Chapter 11's and the concept of disposable income is very important in that context. One author has raised it to constitutional significance, although that is not a raising with which I agree.
Elmer Dean Martin III
P. O. Box 4670
Diamond Bar, CA 91765
909 861 6700
elmer@bankruptcytax .net
The post was migrated from Yahoo.
charset="UTF-8"
In this context, someone just flashed a 9th Circuit decision a couple days old on the listserver which held that disability insurance is included in disposable income. This is of interest for a number of reasons. I'm in the process of reviewing and finalizing the articles for the next issue of the California Bankruptcy Journal which is devoted solely to individual Chapter 11's and the concept of disposable income is very important in that context. One author has raised it to constitutional significance, although that is not a raising with which I agree.
Elmer Dean Martin III
P. O. Box 4670
Diamond Bar, CA 91765
909 861 6700
elmer@bankruptcytax.net
The post was migrated from Yahoo.
I agree with Elmer in several respects and repeat my earlier comment.
Cash received is cash received to be included in the means test. Where the policy has yet to pay out, it is an asset, not cash received. It belongs on B, not on I. It is probably not exempt.
Why would this debtor want to file if she has life insurance money to pay claims?
Right to receive money from policy VESTS on death of insured.
As for Elmer's question, benefits derived from the Soc Sec Act are NOT included for means test purposes. I am not sure if the worker's comp benefits referenced in Koch are derived from the Soc Sec Act or not. But even if they are excluded from the means test and eligibility for Ch 7 issue, they are nonetheless included in the Chapter 13 plan confirmation analysis which requires a debtor to use his/her/their best efforts to repay creditors.
David A. Tilem
Certified Bankruptcy Specialist*
Law Offices of David A. Tilem (a debt relief agency)
206 N. Jackson Street, #201, Glendale, CA 91206
Tel: 818-507-6000 Fax: 818-507-6800
* Bankruptcy specialist cert. by State Bar of CA Bd of Legal Specialization.
on
lmer Martin
Sent: Tuesday, January 20, 2009 9:41 PM
To: cdcbaa@yahoogroups.com
Subject: Re: [cdcbaa] Deceased Spouse / Means Test
I don't understand this thread. If the surviving prospective debtor spouse has the prospect of getting life insurance proceeds, why is she filing? Something rocks my boat about insurance proceeds being disposable income. Is the following, for instance, still good law?
In Re: Eugene Wayne Koch, Debra Marie Nelson-Koch, Debtors. Barbara G. Stuart, United States Trustee, Appellant, v. Eugene Wayne Koch, Debra Marie Nelson-Koch, Appellees.
No. 96-1541
UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT
109 F.3d 1285; 1997 U.S. App. LEXIS 6162; Bankr. L. Rep. (CCH) P77,318; 37 Collier Bankr. Cas. 2d (MB) 1320
November 20, 1996, Submitted
March 28, 1997, Filed
SUBSEQUENT HISTORY: [**1] As Corrected April 1, 1997. As Corrected April 3, 1997.
PRIOR HISTORY: Appeal from the United States District Court for the District of South Dakota. CIV 94-4265. Honorable Lawrence Piersol, District Judge.
DISPOSITION: Reversed.
CASE SUMMARY
PROCEDURAL POSTURE: Appellant challenged a judgment of the United States District Court for the District of South Dakota that affirmed a bankruptcy court's denial of his motion to dismiss appellees' bankruptcy proceeding as a "substantial abuse" under 11
The post was migrated from Yahoo.
I don't understand this thread. If the surviving prospective debtor spouse has the prospect of getting life insurance proceeds, why is she filing? Something rocks my boat about insurance proceeds being disposable income. Is the following, for instance, still good law?
In Re: Eugene Wayne Koch, Debra Marie Nelson-Koch, Debtors. Barbara G. Stuart, United States Trustee, Appellant, v. Eugene Wayne Koch, Debra Marie Nelson-Koch, Appellees.
No. 96-1541
UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT
109 F.3d 1285; 1997 U.S. App. LEXIS 6162; Bankr. L. Rep. (CCH) P77,318; 37 Collier Bankr. Cas. 2d (MB) 1320
November 20, 1996, Submitted
March 28, 1997, Filed
SUBSEQUENT HISTORY: [**1] As Corrected April 1, 1997. As Corrected April 3, 1997.
PRIOR HISTORY: Appeal from the United States District Court for the District of South Dakota. CIV 94-4265. Honorable Lawrence Piersol, District Judge.
DISPOSITION: Reversed.
CASE SUMMARYPROCEDURAL POSTURE: Appellant challenged a judgment of the United States District Court for the District of South Dakota that affirmed a bankruptcy court's denial of his motion to dismiss appellees' bankruptcy proceeding as a "substantial abuse" under 11 U.S.C.S. ? 707(b).
OVERVIEW: Appellees argued that their workers' compensation benefits could not be considered in determining if their bankruptcy petition could be dismissed as a "substantial abuse" under 11 U.S.C.S. 707(b), because state law exempted those benefits from creditor's claims. Appellant argued that the benefits should be considered in the "substantial abuse" determination, because they would be included as disposable income in a proceeding under Bankruptcy Code ch. 13. The court found that the "substantial abuse" determination under 11 U.S.C.S. ? 707(b) involved evaluating appellants' financial condition in a hypothetical Chapter 13 proceeding, and that the benefits would be included as disposable income in a Chapter 13 plan. The court found that the bankruptcy court had erred in not considering the benefits in its "substantial abuse" determination under 11 U.S.C.S. ? 707(b).
OUTCOME: The court reversed the judgment, holding that appellees' workers' compensation benefits would be included as disposable income under Bankruptcy Code ch. 13, and that as such, they should be considered in the "substantial abuse" determination.
The post was migrated from Yahoo.
Life insurance proceeds are an asset - schedule B, not income - Schedule I
David A. Tilem
Certified Bankruptcy Specialist*
Law Offices of David A. Tilem (a debt relief agency)
206 N. Jackson Street, #201, Glendale, CA 91206
Tel: 818-507-6000 Fax: 818-507-6800
* Bankruptcy specialist cert. by State Bar of CA Bd of Legal
Specialization.
Mark T.Jessee
Sent: Monday, January 12, 2009 4:43 PM
To: cdcbaa@yahoogroups.com
Subject: RE: [cdcbaa] Deceased Spouse / Means Test
I cannot see life insurance proceeds being determined for means test
pursposes as being received on an accrual basis based upon date of death of
the decedent Everything else is in the means test is on a cash basis, ie
when it is recieved. We do not care what pay period the paycheck is for,
just when it was issued. The self employed have receivables that were due
but not paid within the prior six months full calendar months. Those do not
accrue as income to be included in the means test. How could life insurance
be any different?
Mark T. Jessee
Law Offices of Mark T. Jessee
"A Debt Relief Agency"
50 W. Hillcrest Drive, Suite 200
Thousand Oaks, CA 91360
(805) 497-5868
NOTICE TO RECIPIENT: THIS E-MAIL IS MEANT FOR ONLY THE INTENDED RECIPIENT OF
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On Mon Jan 12 16:02 , 'Hale Andrew Antico' sent:
Todd,
Oddly, I have the same situation. I just signed with the widow. Five of
six months, the late husband was around, contributing income. So, I used
his income, called it as "household 2" and put all that in B22. I don't
know if there's precedent or if this has been litigated, but common sense
led me to complete it this way. So, include his income, but include him in
the household size - the income didn't earn itself!
Life Ins: For means test purposes, I'd treat life insurance as a bonus.
Future income not part of the "last six months." As such, all other factors
being the same, I'd file before she received it. If it's already coming,
it may cause a presumption of abuse but then file the appropriate paperwork
to decline to dismiss. This would be a great question for Peter, as what
little research I did on this shows a lack of uniform responses by the OUST
nationally. (example: when was it "derived?" - death of spouse or when
benefits began or when benefits received?)
My $.02
Hale
t_mannis
Sent: Sunday, January 11, 2009 12:47 PM
To: cdcbaa@yahoogroups.com
Subject: [cdcbaa] Deceased Spouse / Means Test
Here's a fun one (not).....
Prior to filing, my clients, recently married, just became my client when
the husband just recently passed away. Brings up issues I've yet to
encounter with regard to the means test.
One, must the deceased husband's income now be factored into the prior six
months as far as the means test is concerned? Due to the small amount,
probably wouldn't matter anyway, but still, not sure of the answer. It
certainly was household income, it contributed to "their" expenses, but now
she is not "married" and this is no longer a joint petition.
Two, there may well be a life insurance policy that pays out, and if so,
wife would be the beneficiary. Let's say she collects...as an asset, exempt
as needed for support of family, but is it income for means test purposes?
Without his income, her situation is worse than ever. Can UST say sorry
about your husband and your reduced income, but now you don't pass means
test either, talk to us in six months?
Todd Mannis, Esq.
Yahoo! Groups Links
Message
Life insurance proceeds are
an asset - schedule B, not income - Schedule I
David A.
Tilem
Certified Bankruptcy
Specialist*
The post was migrated from Yahoo.
Hale and Todd:
I think the better practice is to file single with only the clients income.
Notice on B22, Section II, 2 a, the appropriate box to check is "Unmarried".
The instruction for that status is to list only the debtors income. In CA,
death terminates the marriage. It doesn't matter if it is one day or one
year before filling. Therefore, the deceased spouse's income is not
scheduled, nor is he.
If you have any questions or concerns, please contact the Madam Zita.
Pat
Patrick T. Green, Esq.
Fitzgerald & Green
Attorneys at Law
1010 E. Union Street
Suite 206
Pasadena, CA 91106
Tel: 626-449-8433
Fax: 626-449-0565
pat@fitzgreenlaw.com
The post was migrated from Yahoo.
I cannot see life insurance proceeds being determined for means test pursposes as being received on an accrual basis based upon date of death of the decedent Everything else is in the means test is on a cash basis, ie when it is recieved. We do not care what pay period the paycheck is for, just when it was issued. The self employed have receivables that were due but not paid within the prior six months full calendar months. Those do not accrue as income to be included in the means test. How could life insurance be any different?
Mark T. Jessee
Law Offices of Mark T. Jessee
"A Debt Relief Agency"
50 W. Hillcrest Drive, Suite 200
Thousand Oaks, CA 91360
(805) 497-5868
NOTICE TO RECIPIENT: THIS E-MAIL IS MEANT FOR ONLY THE INTENDED RECIPIENT OF
THE TRANSMISSION, AND THIS COMMUNICATION IS INTENDED TO BE PRIVILEGED BY
LAW. IF YOU RECEIVED THIS E-MAIL IN ERROR, ANY REVIEW, USE, DISSEMINATION,
DISTRIBUTION, OR COPYING OF THIS E-MAIL IS STRICTLY PROHIBITED. PLEASE NOTIFY
US IMMEDIATELY OF THE ERROR BY RETURN E-MAIL AND PLEASE DELETE THIS
MESSAGE FROM YOUR SYSTEM. THANK YOU IN ADVANCE FOR YOUR COOPERATION.
On Mon Jan 12 16:02 , 'Hale Andrew Antico' sent:
The post was migrated from Yahoo.
Todd,
Oddly, I have the same situation. I just signed with the widow. Five of
six months, the late husband was around, contributing income. So, I used
his income, called it as "household = 2" and put all that in B22. I don't
know if there's precedent or if this has been litigated, but common sense
led me to complete it this way. So, include his income, but include him in
the household size - the income didn't earn itself!
Life Ins: For means test purposes, I'd treat life insurance as a bonus.
Future income not part of the "last six months." As such, all other factors
being the same, I'd file before she received it. If it's already coming,
it may cause a presumption of abuse but then file the appropriate paperwork
to decline to dismiss. This would be a great question for Peter, as what
little research I did on this shows a lack of uniform responses by the OUST
nationally. (example: when was it "derived?" - death of spouse or when
benefits began or when benefits received?)
My $.02
Hale
t_mannis
Sent: Sunday, January 11, 2009 12:47 PM
To: cdcbaa@yahoogroups.com
Subject: [cdcbaa] Deceased Spouse / Means Test
Here's a fun one (not).....
Prior to filing, my clients, recently married, just became my client when
the husband just recently passed away. Brings up issues I've yet to
encounter with regard to the means test.
One, must the deceased husband's income now be factored into the prior six
months as far as the means test is concerned? Due to the small amount,
probably wouldn't matter anyway, but still, not sure of the answer. It
certainly was household income, it contributed to "their" expenses, but now
she is not "married" and this is no longer a joint petition.
Two, there may well be a life insurance policy that pays out, and if so,
wife would be the beneficiary. Let's say she collects...as an asset, exempt
as needed for support of family, but is it income for means test purposes?
Without his income, her situation is worse than ever. Can UST say sorry
about your husband and your reduced income, but now you don't pass means
test either, talk to us in six months?
Todd Mannis, Esq.
Yahoo! Groups Links
The post was migrated from Yahoo.
Here's a fun one (not).....
Prior to filing, my clients, recently married, just became my client
when the husband just recently passed away. Brings up issues I've
yet to encounter with regard to the means test.
One, must the deceased husband's income now be factored into the
prior six months as far as the means test is concerned? Due to the
small amount, probably wouldn't matter anyway, but still, not sure of
the answer. It certainly was household income, it contributed
to "their" expenses, but now she is not "married" and this is no
longer a joint petition.
Two, there may well be a life insurance policy that pays out, and if
so, wife would be the beneficiary. Let's say she collects...as an
asset, exempt as needed for support of family, but is it income for
means test purposes? Without his income, her situation is worse than
ever. Can UST say sorry about your husband and your reduced income,
but now you don't pass means test either, talk to us in six months?
Todd Mannis, Esq.
The post was migrated from Yahoo.