631 B.R. 807
Bankr. S.D. Florida2021Background
- Debtor filed Chapter 7 on December 10, 2019 and claimed exemptions under 11 U.S.C. §522(b)(3)(B) and Florida law for multiple assets owned with his non‑filing spouse (Laviosa): a Brickell condo, an Orlando residence, membership in Marova, LLC, interests in the Varoma Joint Revocable Living Trust, and the Homestead (held in the Varoma Trust).
- Trustee objected, arguing (a) tenancy by the entireties (TBE) was defeated by lack of joint control/unity and by mortgage paperwork calling for "joint tenants," (b) a joint IRS debt defeats TBE for all creditors, (c) assets in the Varoma revocable trust (including Homestead and other trust assets) are estate property because the trust is revocable and grantors/co‑trustees can remove assets.
- Debtor argued TBE elements are satisfied (no unilateral ability to alienate), the Homestead is exempt under Florida law even if held in a revocable trust, and trust documents restrict unilateral removal so Trustee cannot reach trust assets beyond a settlor’s own contributed property.
- Court held on summary judgment for Debtor: Trustee’s broad joint‑debt theory rejected (only assets necessary to satisfy joint creditor may be used), Brickell and Orlando properties and Marova, LLC membership qualify as TBE, Homestead exemption applies despite trust title, and Trustee may not administer or reach Varoma Trust assets under governing Florida law and the trust instrument.
- All Trustee objections to the claimed exemptions were overruled; Debtor’s motion for summary judgment was granted.
Issues
| Issue | Trustee's Argument | Debtor's Argument | Held |
|---|---|---|---|
| Effect of any joint debt on TBE exemptions | Any joint debt (IRS) forfeits TBE protection for benefit of all creditors | Only joint creditors can reach TBE property; joint‑debt should not defeat exemptions for other creditors | Court: Rejects Trustee’s broad rule; only assets necessary to pay the joint creditor may be used to satisfy that creditor |
| Brickell Heights & Orlando properties: TBE status | Lack of unity of possession/control (spouse made decisions); mortgage apps listed "joint tenants" | Neither spouse could unilaterally alienate; presumption of TBE in jointly‑titled real property not rebutted | Court: TBE presumption stands; exemptions upheld |
| Marova, LLC membership: TBE status | Alleged lack of joint control (articles/reports show single manager at times) | Operating agreement names both as managers and 100% owners as "Tenants by Entireties"; no unilateral alienation | Court: Membership interest qualifies as TBE; Trustee failed to show material factual dispute |
| Homestead held in revocable trust: exempt? | Title in trust defeats homestead exemption | Homestead protection applies regardless of title; debtor occupied and acquired before marriage; revocable trust does not defeat exemption | Court: Homestead exemption applies despite trust title; Trustee’s objection overruled |
| Varoma Trust assets: estate property/reachable? | Trust is revocable; grantor/co‑trustee powers allow removal; Trustee can administer trust assets | Florida law limits unilateral removal: each settlor can revoke/amend only as to their contributed property; co‑trustees must act unanimously; Trustee cannot step into co‑trustee/grantor powers to reach assets | Court: Trustee cannot reach or administer Varoma Trust assets under applicable Florida law and trust terms; objections overruled |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (summary judgment standard)
- Beal Bank, SSB v. Almand & Assocs., 780 So. 2d 45 (Fla. 2001) (elements and presumption of tenancy by the entireties)
- Sumy v. Schlossberg, 777 F.2d 921 (4th Cir. 1985) (allocation between joint creditors and other creditors re: TBE)
- United States v. Whiting Pools, Inc., 462 U.S. 198 (1983) (trustee "stands in the shoes" of debtor)
- In re Witko, 374 F.3d 1040 (11th Cir. 2004) (trustee acquires no greater rights than debtor)
- In re Raborn, 470 F.3d 1319 (11th Cir. 2006) (trustee succeeds only to debtor’s trust interests)
- In re Brown, 303 F.3d 1261 (11th Cir. 2002) (limitations on reachability of spendthrift/revocable trust interests)
- In re Alexander, 346 B.R. 546 (Bankr. M.D. Fla. 2006) (homestead protection for property held in revocable trust)
- Roberts‑Dude v. JPMorgan Chase Bank, N.A., 498 B.R. 348 (S.D. Fla. 2013) (presumption that jointly titled real property between spouses vests as TBE)