Case Summary:
Debtor Jennifer Nordgaard moved to receive funds held in her counsel’s trust account as exempt funds, and the Trustee objected and separately filed an objection to the Debtor’s claim of exemptions. Debtor divorced her ex-spouse several months before filing her petition. As part of the divorce, her husband was ordered to refinance the couples’ marital homestead and pay the Debtor her interest in the homestead’s equity. Her husband failed to refinance the property. Debtor listed the funds that she was entitled to receive from her husband on her Schedule C as exempt under Wisconsin’s homestead exemption and a retirement account exemption. Two months after filing, the divorce court ordered the ex-spouse to pay Debtor the funds, which were then held in Debtor’s counsel’s trust account. After the funds were received, the Debtor quitclaimed her interest in the property to her ex-spouse. Debtor then moved to receive the funds. The Trustee objected. The Court ruled for the Debtor regarding the homestead exemption, and against the Debtor regarding the retirement account exemption. The Debtor was entitled to receive the funds as exempt homestead proceeds because they derived from the Debtor’s former homestead and the Debtor did not relinquish her interest in the property until after the funds were paid. But the funds were not properly exempted as retirement funds because they were not held in a retirement account, they were not employer sponsored, and there was no assertion that the account the funds were held in qualified as an IRA under the Internal Revenue Code.
Statute References:
11 U.S.C. § 522(b)(2) -- Exemptions – State Law
Wis. Stat. § 815.18 -- Exemptions (Homestead and Retirement Benefits)
Wis. Stat. § 815.20 -- Homestead Exemption
Wis. Stat. § 990.01(14)
Key Terms:
Exemptions
Homestead Exemption
Retirement Account Exemption