Silliman v. Cassell (In Re Cassell)
443 B.R. 200
| Bankr. N.D. Ga. | 2010Background
- Debtor Lou Ann Cassell filed a Chapter 7 case and her wholly-owned business also filed.
- Debtor listed a National Life Insurance annuity as exempt; Trustee objected.
- Aunt’s $220,000 inheritance funded the single-premium annuity purchased May 1, 2009.
- Annuity payer: Debtor; beneficiary designation is revocable but Debtor designated children.
- Payment option chosen: life annuity with guaranteed period; $1,389.14 monthly starting June 2009.
- Court held the annuity qualifies under OCGA § 44-13-100(a)(2)(E) and payments are on account of age; irrevocable designation to bankruptcy estate required; evidentiary hearing possible on necessity of payments for support.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the annuity is exempt under OCGA § 44-13-100(a)(2)(E). | Trustee argues annuity isn’t the exemptible type. | Cassell contends it is a pension/annuity-like plan exemptible. | Yes; annuity is exemptible under § 44-13-100(a)(2)(E). |
| Whether payments are on account of age, illness, disability, death, or length of service. | Trustee contends payments not on account of age. | Cassell argues payments are for age-related retirement needs. | Yes; payments are on account of age. |
| Whether payments are reasonably necessary for the debtor’s support. | Trustee claims payments to beneficiaries may not be necessary for debtor’s support. | Debtor contends some payments may be necessary; evidence insufficient at bar. | Partially; payments to beneficiaries during guaranteed period not necessary; irrevocable beneficiary designation to bankruptcy estate required; further evidence may be heard. |
| Whether the debtor’s control over the annuity defeats exemption (pre-bankruptcy planning concerns). | Trustee argues control factors undermine retirement-vehicle character. | Cassell argues control is not unusual for retirement vehicles and not dispositive. | Control factors do not defeat exemption; overall factors support exemption. |
Key Cases Cited
- In re Bramlette, 333 B.R. 911 (Bankr. N.D. Ga. 2005) (an annuity can be exempt if it functions as a retirement plan and provides age-related payments)
- In re Andersen, 259 B.R. 687 (Bankr. N.D. Ga. 2001) (wage-substitute retirement plan factors apply to determine exemption)
- In re Michael, 339 B.R. 798 (Bankr. N.D. Ga. 2005) (employment-based or similar plans; test for exemption)
- Rousey v. Jacoway, 544 U.S. 320 (Supreme Court 2005) (retirement accounts providing for penalties considered for exemption)
- Weidman v. Shapiro, 299 B.R. 429 (Bankr. E.D. Mich. 2003) (inheritance-derived annuity not automatically exempt as wage substitute)
- Havoco of Am., Ltd. v. Hill, 255 F.3d 1321 (11th Cir. 2001) (convertible nonexempt assets to exempt assets not per se fraudulent)