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Annuity Funds and Submitting Chapter in Minneapolis, MN


Not all annuity funds in a chapter will probably be exempt. For the annuity fee to be exempt in a chapter submitting it should be the kind described by Congress underneath exemption § 522(d)(10). 

11 U.S.C. § 522(d)(10) which exempts: 

(10) The debtor’s proper to obtain — 

(E) a fee underneath a inventory bonus, pension, profit-sharing, annuity, or related plan or contract on account of sickness, incapacity, loss of life, age, or size of service, to the extent moderately crucial for the assist of the debtor and any dependent of the debtor, except, —

(i) such plan or contract was established by or underneath the auspices of an insider that employed the debtor on the time the debtor’s rights underneath such plan or contract arose;

(ii) such fee is on account of age or size of service; and(iii) such fee is on account of age or size of service; and

(iii) such plan or contract doesn’t qualify underneath part 401(a), 403(a), 403(b), or 408 of the Inner Income Code of 1986. § 522(d)(10)


Paragraph (10) exempts sure advantages which might be akin to future earnings of the debtor. These embody advantages underneath a sure inventory bonus, pension, profit-sharing, annuity or related plan based mostly on sickness, incapacity, loss of life, age or size of service. However an annuity bought with non-exempt property seemingly will fail to fulfill the factors to be exempted underneath § 522(d)(10).  

The debtor’s intention for buying the annuity could have been to offer for age or incapacity, however the court docket will look past the debtor’s acknowledged intention. Even when the annuity buy had nothing to do with chapter planning and the annuity was bought years upfront of the chapter submitting . The eighth circuit courts have held, to exempt annuities bought with out anticipation of a chapter would disregard the controlling regulation that determines qualification for the exemption underneath the statue based mostly on the character of the funding. 


The court docket has held an annuity is not any much less of a monetary funding than a purchase order of shares, bonds, actual property, or a easy checking account. The eighth circuit has held to permit the annuity would convert a statute supposed to guard “advantages which might be akin to future earnings” — which for the aged are usually retirement earnings — right into a statute conferring vastly broader chapter safety. Because the chapter court docket noticed:

If annuity funds have been “on account of age” merely as a result of the debtor bought the annuity when she was previous retirement age, all individuals previous retirement age ought to transfer their property into such an annuity after which file chapter. . . . Underneath this scheme, no debtor previous retirement age would have any property topic to execution, may stay in a million-dollar residence, have a considerable stream of earnings, just about stay off his collectors, and but be judgment proof. In re Eilbert, 162 F.3d 523 at 526 (eighth Cir. 1998).



Just because an annuity is bought with out the anticipation of an imminent chapter and the debtor is previous retirement age or plans to make use of the annuity throughout retirement doesn’t imply that it’ll qualify for exemption underneath 11 U.S.C. § 522(d)(10). Contact the attorneys at LifeBackLaw and see us at and allow us to assist you to get your life again.



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