504 B.R. 800
Bankr. W.D. Pa.2014Background
- Debtor Michele Burgeson filed a voluntary Chapter 7 petition on October 27, 2010; trustee Walsh objected to exemptions.
- Debtor had previously filed for divorce from ex-husband Martin Burgeson; Pennsylvania divorce action sought equitable distribution of marital assets.
- As of the petition date, the ex-husband’s ERISA-qualified pension existed; Debtor was not a participant or beneficiary of the pension.
- A QDRO and state court orders ultimately awarded the Debtor one-half of the marital share, but none existed as of the petition date.
- Pennsylvania law vests a marital interest in property (equitable distribution right) upon initiation of divorce action with requested distribution; such interest is estate property.
- The court previously limited the Debtor’s exemption under § 522(d)(5) to $10,325, and later held the exemption in the pension cannot be claimed under § 522(b)(4)(A) but can be limited under § 522(d)(5).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Debtor’s interest in ex-husband’s pension was estate property on petition date | Walsh: Debtor held only a right to equitable distribution, not a pension interest. | Burge son: ERISA rights may exempt the pension via Patterson v. Shumate. | Debtor had no pension interest; estate property = right to equitable distribution. |
| Whether Debtor’s right to equitable distribution can be exempted | Walsh: exemption under § 522(b)(4)(A) applies to retirement funds. | Burge son: no retirement fund interest exists; exemption limited to $10,325 under § 522(d)(5). | Exemption limited to $10,325 under § 522(d)(5); § 522(b)(4)(A) not applicable. |
Key Cases Cited
- Patterson v. Shumate, 504 U.S. 753 (U.S. 1992) (ERISA anti-alienation excludes pension interests under § 541(c)(2))
- Boggs v. Boggs, 520 U.S. 833 (U.S. 1997) (QDRO confers beneficiary status via spouse’s rights in ERISA plan)
- Nelson, 322 F.3d 541 (8th Cir. 2003) (all who acquire beneficiary status via QDRO receive ERISA protections)
- In re Radinick, 419 B.R. 291 (Bankr.W.D.Pa. 2009) (Pennsylvania marital interest vests at divorce action initiation; estate property)