Also known as: exempt properties · property exemption · exempt assets
Written by attorneys — see sources below.
2 senses
A debtor's holdings and possessions that by law a creditor cannot attach to satisfy a debt. The exemption prevents debtors from becoming destitute by shielding specified assets such as household items up to a statutory limit.
A debtor's holdings and possessions that by law a creditor cannot attach to satisfy a debt. The exemption prevents debtors from becoming destitute by shielding specified assets such as household items up to a statutory limit.
Ezra Eastman held property in tenancy by the entirety with his spouse. The United States asserted a tax lien against the property. The Court held that the federal tax lien could attach to the husband's interest because state-law exemptions and fictions do not limit the definition of property reachable by federal tax liens.
Personal property that a surviving spouse is automatically entitled to receive from the decedent's estate. The allowance takes priority over creditor claims and is received in addition to any elective share or testamentary disposition.
Personal property that a surviving spouse is automatically entitled to receive from the decedent's estate. The allowance takes priority over creditor claims and is received in addition to any elective share or testamentary disposition.
Each sense below has its own examples, sources, and questions.
In 1988, the Internal Revenue Service assessed $482,446 in unpaid income tax liabilities against Don Craft for his failure to file federal income tax returns for the years 1979 through 1986. At that time, Don Craft and his wife, respondent Sandra L. Craft, owned a piece of real property in Grand Rapids, Michigan, as tenants by the entirety. After notice of the federal tax lien was filed, the Crafts jointly executed a quitclaim deed purporting to transfer Don Craft's interest in the property to Sandra Craft for one dollar. When Sandra Craft later attempted to sell the property, a title search revealed the lien. The IRS agreed to release the lien to allow the sale on the condition that half of the net proceeds be held in escrow pending determination of the Government's interest. Sandra Craft then brought an action in the United States District Court for the Western District of Michigan to quiet title to the escrowed proceeds. The District Court granted summary judgment to the Government. On appeal, the United States Court of Appeals for the Sixth Circuit held that the tax lien did not attach to the property under Michigan law and remanded for consideration of the Government's fraudulent conveyance claim. On remand, the District Court found that the conveyance itself was not fraudulent but that the use of nonexempt funds to pay the mortgage constituted a fraudulent act, and it awarded the IRS a share of the proceeds. The Sixth Circuit affirmed that determination on the lien issue as law of the case. The Supreme Court granted certiorari to consider whether Don Craft had a separate interest in the entireties property to which the federal tax lien attached.
View case1 common questions
In bankruptcy and debtor-creditor law, exempt property refers to assets an individual debtor may keep from creditors under state or federal exemption statutes. Those protections are distinct from the probate allowance awarded to a surviving spouse.
Evelyn Ellison signed a written agreement before marrying Elliot Edmonds that waived her rights to homestead allowance, exempt property, and family allowance. After Elliot's death, Evelyn sought the exempt property from the estate. The court enforced the waiver because it was a signed writing and Evelyn did not prove duress or involuntariness.
Emily Ellis feloniously and intentionally killed her husband Eduardo Enriquez. She then claimed exempt property from his estate. The court held that Emily forfeited the exempt property because the killing was felonious and intentional, causing the estate to pass as if she had disclaimed her interest.
Esme Ellington intentionally killed her husband and later sought exempt property from his probate estate. The court denied the claim, applying the rule that a person who feloniously kills the decedent cannot receive exempt property or other statutory spousal benefits.
Joseph A. Richardson and Ida Richardson divorced in December 1997. They executed a separation agreement providing that Joseph would pay Ida maintenance of $2,425.00 per month, terminating upon Ida’s remarriage or the death of either party. The agreement stated that its terms would not be subject to modification or change, regardless of the relative circumstances of the parties. The trial court incorporated the agreement into the Judgment and Decree of Dissolution and stated that maintenance was non-modifiable. In 2004 Joseph filed a motion to modify the judgment. In Count II he alleged that Ida sought out persons to burglarize his home, sought out persons to murder him, and attempted to hire a person to murder him. He further alleged that these acts breached the separation agreement, violated public policy, committed criminal acts, and waived any claim to maintenance. The trial court dismissed Count II with prejudice for failure to state a claim upon which relief can be granted. The dismissal order was certified as a final judgment and order under Rule 74.01(b). Joseph appealed the dismissal. The Eastern District Court of Appeals transferred the matter to the Supreme Court of Missouri.
View case3 common questions
A surviving spouse may waive the right to exempt property only by a written agreement signed before or after marriage. The agreement is enforceable without consideration but is unenforceable if the spouse proves it was involuntary or the result of duress.
Supporting sources
An individual who feloniously and intentionally kills the decedent forfeits all benefits with respect to the decedent's estate, including exempt property. The estate then passes as if the killer had disclaimed the interest.
Supporting sources
Exempt property is a fixed amount of personal property automatically awarded to a surviving spouse. A homestead allowance protects the family home or its value and is a separate statutory protection that may be reduced by any preexisting constitutional homestead interest.
…played in "creating and defining" property interests. By erasing the careful line between state laws that purport to disclaim or exempt property interests after the fact, which the federal tax lien does not respect, and state laws' definition of property and property rights, which the federal tax lien does respect, the Court does…