567 B.R. 357
8th Cir. BAP2017Background
- Debtor purchased a $100,000 single-premium annuity in May 2013 using proceeds from sale of the marital residence; elected to receive $436 monthly payments beginning 30 days after purchase with a 20-year guarantee.
- Debtor filed Chapter 7 in March 2016 and claimed a $436 monthly exemption for the annuity under Mo. Rev. Stat. § 513.430.1(10)(e).
- Prior to the annuity purchase, Debtor’s husband had died (Dec. 2012); Debtor sold the home and made substantial gifts to family; business debts related to commercial property were delinquent and foreclosure occurred.
- Trustee objected to the exemption, arguing the annuity payments are not exempt because they are not payments “on account of illness, disability, death, age or length of service.”
- Bankruptcy court sustained Trustee’s objection; District BAP affirmed, holding the payments were not causally tied to the husband’s death or Debtor’s age because payments were triggered by Debtor’s purchase and election to start payments, not by an enumerated statutory event.
Issues
| Issue | Debtor's Argument | Trustee's Argument | Held |
|---|---|---|---|
| Whether monthly payments from a pre-petition single-premium annuity are exempt under Mo. Rev. Stat. § 513.430.1(10)(e) | Payments are exempt as made "on account of" Debtor’s husband’s death (Debtor bought annuity because of his death) | Payments are not "on account of" death or age because payment entitlement was triggered by Debtor’s purchase and election to begin payments | Payments are not exempt under § 513.430.1(10)(e); causal nexus to death or age is lacking |
Key Cases Cited
- Rousey v. Jacoway, 544 U.S. 320 (interpreting "on account of" to require a causal connection)
- Eilbert v. Pelican (In re Eilbert), 162 F.3d 523 (annuity payments not automatically "on account of" age merely because annuitant is elderly)
- Abdul‑Rahim v. LaBarge (In re Abdul‑Rahim), 720 F.3d 710 (bankruptcy exemptions and estate composition principles)
- Vickers (In re Vickers), 954 F.2d 1426 (Missouri statute substantially similar to federal exemption language)
- Andersen v. Ries (In re Andersen), 259 B.R. 687 (annuity exemption interpretation under similar statutory language)