California Legislature—2013–14 Regular Session

Assembly Bill No. 198

Introduced by Assembly Member Wieckowski

January 29, 2013

An act to amend Sections 703.140, 704.010, 704.100, 704.113, 704.720, and 704.960 of, and to add Section 704.111 to, the Code of Civil Procedure, relating to exempt property.

LEGISLATIVE COUNSEL’S DIGEST

AB 198, as introduced, Wieckowski. Exempt property.

Existing law identifies various types of property of a judgment debtor that are exempt from enforcement of a money judgment. Existing law provides that property described in statute as exempt may be claimed within the time and in the manner prescribed in the applicable enforcement procedure, and property described in statute as exempt without making a claim is not subject to any procedure for enforcement of a money judgment. These general exemptions are available to a debtor in a federal bankruptcy case, whether a money judgment is being enforced by execution sale or other procedure, unless the debtor elects certain alternative exemptions.

(1) Existing law provides that the benefits from a matured life insurance policy, including an endowment or annuity policy, are exempt to the extent reasonably necessary for the support of the debtor and the spouse and dependents of the debtor.

This bill would expand this exemption to include an amount of benefits up to $300,000 plus any amount that is reasonably necessary for the support, as defined, of the debtor and his or her spouse and dependents. The bill also would add an alternative exemption for the debtor’s interest in these expanded benefits.

(2) Existing law includes an alternative exemption for any unmatured life insurance contract owned by the debtor, other than a credit life insurance contract.

This bill would clarify that this alternative exemption applies regardless of the age or physical health of the debtor.

(3) Existing law provides that vacation credits, as defined, are exempt from enforcement of a money judgment without making a claim.

This bill would delete the definition of “vacation credits” set forth in these provisions and expand this general exemption to also include accrued or unused vacation pay. The bill also would add an alternative exemption for the debtor’s right to receive these expanded assets.

(4) Existing law provides that up to $2,300 of any combination of aggregate equity in motor vehicles, the proceeds of an execution sale of a motor vehicle, and the proceeds of insurance or other indemnification for the loss, damage, or destruction of a motor vehicle, is exempt. Existing law includes an alternative exemption for up to $4,800 of the debtor’s interest in one or more motor vehicles.

This bill would increase the amount of the general exemption for motor vehicle equity to $4,800, matching the maximum amount of the alternative exemption for motor vehicles, and make conforming changes.

(5) Existing law includes an alternative exemption for the debtor’s right to receive alimony, support, or separate maintenance, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor.

This bill would provide that these assets are exempt, thereby adding a general exemption matching the existing alternative exemption.

(6) Existing law provides that the proceeds of sale or of insurance or other indemnification for damage or destruction of a homestead, the proceeds received as compensation for a homestead acquired for public use, or the proceeds from a voluntary sale of a declared homestead are exempt in the amount of the homestead exemption provided in a specified statute for a period of six months after the time the proceeds are actually received by the judgment debtor, except as provided.

This bill would delete the six-month limitation on these exemptions, thereby making these proceeds exempt indefinitely, and make conforming changes.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 703.140 of the Code of Civil Procedure
is amended to read:

703.140.  

(a) In a case under Title 11 of the United States Code,
all of the exemptions provided by this chapter, including the
homestead exemption, other than the provisions of subdivision (b)
are applicable regardless of whether there is a money judgment
against the debtor or whether a money judgment is being enforced
by execution sale or any other procedure, but the exemptions
provided by subdivision (b) may be elected in lieu of all other
exemptions provided by this chapter, as follows:

(1) If a husband and wife are joined in the petition, they jointly
may elect to utilize the applicable exemption provisions of this
chapter other than the provisions of subdivision (b), or to utilize
the applicable exemptions set forth in subdivision (b), but not both.

(2) If the petition is filed individually, and not jointly, for a
husband or a wife, the exemptions provided by this chapter other
than the provisions of subdivision (b) are applicable, except that,
if both the husband and the wife effectively waive in writing the
right to claim, during the period the case commenced by filing the
petition is pending, the exemptions provided by the applicable
exemption provisions of this chapter, other than subdivision (b),
in any case commenced by filing a petition for either of them under
Title 11 of the United States Code, then they may elect to instead
utilize the applicable exemptions set forth in subdivision (b).

(3) If the petition is filed for an unmarried person, that person
may elect to utilize the applicable exemption provisions of this
chapter other than subdivision (b), or to utilize the applicable
exemptions set forth in subdivision (b), but not both.

(b) The following exemptions may be elected as provided in
subdivision (a):

(1) The debtor’s aggregate interest, not to exceed twenty-four
thousand sixty dollars ($24,060) in value, in real property or
personal property that the debtor or a dependent of the debtor uses
as a residence, in a cooperative that owns property that the debtor
or a dependent of the debtor uses as a residence.

(2) The debtor’s interest, not to exceed four thousand eight
hundred dollars ($4,800) in value, in one or more motor vehicles.

(3) The debtor’s interest, not to exceed six hundred dollars
($600) in value in any particular item, in household furnishings,
household goods, wearing apparel, appliances, books, animals,
crops, or musical instruments, that are held primarily for the
personal, family, or household use of the debtor or a dependent of
the debtor.

(4) The debtor’s aggregate interest, not to exceed one thousand
four hundred twenty-five dollars ($1,425) in value, in jewelry held
primarily for the personal, family, or household use of the debtor
or a dependent of the debtor.

(5) The debtor’s aggregate interest, not to exceed in value one
thousand two hundred eighty dollars ($1,280) plus any unused
amount of the exemption provided under paragraph (1), in any
property.

(6) The debtor’s aggregate interest, not to exceed seven thousand
one hundred seventy-five dollars ($7,175) in value, in any
implements, professional books, or tools of the trade of the debtor
or the trade of a dependent of the debtor.

(7) Any unmatured life insurance contract owned by the debtor,
other than a credit life insurance contract begin insert , regardless of the debtor’s end insert
begin insert age or physical health end insert .

(8) The debtor’s aggregate interest, not to exceed in value twelve
thousand eight hundred sixty dollars ($12,860), in any accrued
dividend or interest under, or loan value of, any unmatured life
insurance contract owned by the debtor under which the insured
is the debtor or an individual of whom the debtor is a dependent.

begin insert

(9) The debtor’s interest, not to exceed three hundred thousand
dollars ($300,000) plus any amount that is reasonably necessary
for the support of the judgment debtor and his or her spouse and
dependents, in benefits from a matured life insurance policy,
including an endowment or annuity policy. As used in this
paragraph, “reasonably necessary for the support” means required
to meet present and future needs, as determined by the court after
consideration of the debtor’s responsibilities and all the present
and anticipated property and income of the debtor, including
exempt property.

end insert begin delete

(9) 

end delete

begin insert (10) end insert begin insert   end insert Professionally prescribed health aids for the debtor or a
dependent of the debtor.

begin delete

(10) 

end delete

begin insert (11) end insert begin insert   end insert The debtor’s right to receive any of the following:

(A) A social security benefit, unemployment compensation, or
a local public assistance benefit.

(B) A veterans’ benefit.

(C) A disability, illness, or unemployment benefit.

(D) Alimony, support, or separate maintenance, to the extent
reasonably necessary for the support of the debtor and any
dependent of the debtor.

(E) A payment under a stock bonus, pension, profit-sharing,
annuity, or similar plan or contract on account of illness, disability,
death, age, or length of service, to the extent reasonably necessary
for the support of the debtor and any dependent of the debtor,
unless all of the following apply:

(i) That plan or contract was established by or under the auspices
of an insider that employed the debtor at the time the debtor’s
rights under the plan or contract arose.

(ii) The payment is on account of age or length of service.

(iii) That plan or contract does not qualify under Section 401(a),
403(a), 403(b), 408, or 408A of the Internal Revenue Code of
1986.

begin insert

(F) Vacation credits or accrued or unused vacation pay.

end insert begin delete

(11) 

end delete

begin insert (12) end insert begin insert   end insert The debtor’s right to receive, or property that is traceable
to, any of the following:

(A) An award under a crime victim’s reparation law.

(B) A payment on account of the wrongful death of an individual
of whom the debtor was a dependent, to the extent reasonably
necessary for the support of the debtor and any dependent of the
debtor.

(C) A payment under a life insurance contract that insured the
life of an individual of whom the debtor was a dependent on the
date of that individual’s death, to the extent reasonably necessary
for the support of the debtor and any dependent of the debtor.

(D) A payment, not to exceed twenty-four thousand sixty dollars
($24,060), on account of personal bodily injury of the debtor or
an individual of whom the debtor is a dependent.

(E) A payment in compensation of loss of future earnings of
the debtor or an individual of whom the debtor is or was a
dependent, to the extent reasonably necessary for the support of
the debtor and any dependent of the debtor.

SEC. 2.  

Section 704.010 of the Code of Civil Procedure is
amended to read:

704.010.  

(a) Any combination of the following is exempt in
the amount of begin delete two end delete begin insert four end insert thousand begin delete three end delete begin insert eight end insert hundred dollars
begin delete ($2,300) end delete begin insert ($4,800) end insert :

(1) The aggregate equity in motor vehicles.

(2) The proceeds of an execution sale of a motor vehicle.

(3) The proceeds of insurance or other indemnification for the
loss, damage, or destruction of a motor vehicle.

(b) Proceeds exempt under subdivision (a) are exempt for a
period of 90 days after the time the proceeds are actually received
by the judgment debtor.

(c) For the purpose of determining the equity, the fair market
value of a motor vehicle shall be determined by reference to used
car price guides customarily used by California automobile dealers
unless the motor vehicle is not listed in such price guides.

(d) If the judgment debtor has only one motor vehicle and it is
sold at an execution sale, the proceeds of the execution sale are
exempt in the amount of begin delete two end delete begin insert four end insert thousand begin delete three end delete begin insert eight end insert hundred
dollars begin delete ($2,300) end delete begin insert ($4,800) end insert without making a claim. The levying
officer shall consult and may rely upon the records of the
Department of Motor Vehicles in determining whether the
judgment debtor has only one motor vehicle. In the case covered
by this subdivision, the exemption provided by subdivision (a) is
not available.

SEC. 3.  

Section 704.100 of the Code of Civil Procedure is
amended to read:

704.100.  

(a)  begin delete Unmatured end delete begin insert An unmatured end insert life insurance begin delete policies end delete
begin delete (including end delete begin insert policy, including an end insert endowment begin delete and end delete begin insert or end insert annuity begin delete policies), end delete
begin delete but not end delete begin insert policy, excluding end insert the loan value of begin delete such policies, are end delete begin insert the end insert
begin insert policy, is end insert exempt without making a claim.

(b) The aggregate loan value of begin insert an end insert unmatured life insurance
begin delete policies (including end delete begin insert policy, including an end insert endowment begin delete and end delete begin insert or end insert annuity
begin delete policies) end delete begin insert policy, end insert is subject to the enforcement of a money judgment
but is exempt in the amount of nine thousand seven hundred dollars
($9,700). If the judgment debtor is married, each spouse is entitled
to a separate exemption under this subdivision, and the exemptions
of the spouses may be combined, regardless of whether the begin delete policies end delete
begin delete belong end delete begin insert policy belongs end insert to either or both spouses and regardless of
whether the spouse of the judgment debtor is also a judgment
debtor under the judgment. The exemption provided by this
subdivision shall be first applied to policies other than the policy
before the court and then, if the exemption is not exhausted, to the
policy before the court.

(c) Benefits from begin insert a end insert matured life insurance begin delete policies (including end delete
begin insert policy, including an end insert endowment begin delete and end delete begin insert or end insert annuity begin delete policies) end delete begin insert policy, end insert
are exempt begin delete to the extent end delete begin insert in an amount not to exceed three hundred end insert
begin insert thousand dollars ($300,000) plus any amount end insert reasonably necessary
for the support of the judgment debtor and the spouse and
dependents of the judgment debtor. begin insert end insert begin insert As used in this paragraph, end insert
begin insert “reasonably necessary for the support” means an amount required end insert
begin insert to meet present and future needs, as determined by the court after end insert
begin insert consideration of the debtor’s responsibilities and all the present end insert
begin insert and anticipated property and income of the debtor, including end insert
begin insert exempt property. end insert

SEC. 4.  

Section 704.111 is added to the Code of Civil
Procedure, to read:

704.111.  

Alimony, support, and separate maintenance, to the
extent reasonably necessary for the support of the debtor and any
dependent of the debtor, are exempt.

SEC. 5.  

Section 704.113 of the Code of Civil Procedure is
amended to read:

begin delete

704.113.  

(a) As used in this section, “vacation credits” means
vacation credits accumulated by a state employee pursuant to
Section 18050 of the Government Code or by any other public
employee pursuant to any law for the accumulation of vacation
credits applicable to the employee.

(b)

end delete

begin insert

begin insert 704.113. end insert   

end insert

begin insert (a) end insert begin insert   end insert All vacation credits begin delete are end delete begin insert or accrued or unused end insert
begin insert vacation pay is end insert exempt without making a claim.

begin delete

(c) 

end delete

begin insert (b) end insert begin insert   end insert Amounts paid periodically or as a lump sum representing
vacation credits are subject to any earnings withholding order
served under Chapter 5 (commencing with Section 706.010) or
any earnings assignment order for support as defined in Section
706.011 and are exempt to the same extent as earnings of a
judgment debtor.

SEC. 6.  

Section 704.720 of the Code of Civil Procedure is
amended to read:

704.720.  

(a) A homestead is exempt from sale under this
division to the extent provided in Section 704.800.

(b) If a homestead is sold under this division or is damaged or
destroyed or is acquired for public use, the proceeds of sale or of
insurance or other indemnification for damage or destruction of
the homestead or the proceeds received as compensation for a
homestead acquired for public use are exempt in the amount of
the homestead exemption provided in Section 704.730. begin delete The
proceeds are exempt for a period of six months after the time the
proceeds are actually received by the judgment debtor, except that,
if a homestead exemption is applied to other property of the
judgment debtor or the judgment debtor’s spouse during that
period, the proceeds thereafter are not exempt. end delete

(c) If the judgment debtor and spouse of the judgment debtor
reside in separate homesteads, only the homestead of one of the
spouses is exempt and only the proceeds of the exempt homestead
are exempt.

(d) If a judgment debtor is not currently residing in the
homestead, but his or her separated or former spouse continues to
reside in or exercise control over possession of the homestead, that
judgment debtor continues to be entitled to an exemption under
this article until entry of judgment or other legally enforceable
agreement dividing the community property between the judgment
debtor and the separated or former spouse, or until a later time
period as specified by court order. Nothing in this subdivision shall
entitle the judgment debtor to more than one exempt homestead.
Notwithstanding subdivision (d) of Section 704.710, for purposes
of this article, “spouse” may include a separated or former spouse
consistent with this subdivision.

SEC. 7.  

Section 704.960 of the Code of Civil Procedure is
amended to read:

704.960.  

begin delete (a) end delete begin delete   end delete If a declared homestead is voluntarily sold, the
proceeds of sale are exempt in the amount provided by Section
704.730 begin delete for a period of six months after the date of sale end delete .

begin delete

(b) If the proceeds of a declared homestead are invested in a
new dwelling within six months after the date of a voluntary sale
or within six months after proceeds of an execution sale or of
insurance or other indemnification for damage or destruction are
received, the new dwelling may be selected as a declared
homestead by recording a homestead declaration within the
applicable six-month period. In such case, the homestead
declaration has the same effect as if it had been recorded at the
time the prior homestead declaration was recorded.

end delete