CAPRP_Tracing CAPRP Exemption_Tracing CaprpPostDistributionExemptionTracingIssues
California law at CCP § 703.080 provides for the "tracing" of exempt funds, i.e., an exemption for an asset follows the funds deriving from the asset so long as they can be uniquely identified as having come from the exempt asset. The statute provides in toto:
CCP § 703.080
(a) Subject to any limitation provided in the particular exemption, a fund that is exempt remains exempt to the extent that it can be traced into deposit accounts or in the form of cash or its equivalent.
(b) The exemption claimant has the burden of tracing an exempt fund.
(c) The tracing of exempt funds in a deposit account shall be by application of the lowest intermediate balance principle unless the exemption claimant or the judgment creditor shows that some other method of tracing would better serve the interests of justice and equity under the circumstances of the case.
Notice that the statute is limited to "fund". Once exempt, traced moneys are converted into something other than a fund or another exempt asset, the exemption is forever lost. Example: Mary receives a $50,000 distribution from her California Private Retirement Plan and places it into a bank account which holds only and exclusively the moneys which she received from the Plan; the account and the $50,000 are exempt from creditors. Mary later uses the $50,000 to purchase a luxury automobile with the funds; the exemption under the tracing statute is lost, and Mary will receive only the minimal $4,800 exemption against the value of the automobile when it is levied and sold at a Sheriff's sale, i.e., Mary will get a check from the Sheriff for $4,800 and the balance (less the costs of the auction) will go to Mary's creditors.
The use of the tracing statute of CCP § 703.080 as applied to transfers involving California Private Retirement Plans, is addressed in the following court opinions:
In re Friedman, 220 B.R. 670 (9th Cir. B.A.P., 1998).
McMullen v. Haycock, 147 Cal.App.4th 753, 54 Cal.Rptr. 3d 660 (2007).
Salameh v. Tarsadia Hotel, 2015 WL 6028927 (S.D.Cal., 2015).
California Private Retirement Plans Post-Distribution Exemption-Tracing Issues Topics And Opinions
California Private Retirement Plan Topics And Opinions -- All Pages
- California Code of Civil Procedure 704.115
- California Private Retirement Plan Defects
- Gluck v. Sarkissian, 2021 WL 5407188 (Cal.App., 2nd Distr., Unpublished, Nov. 19, 2021).
- In re Barnes, 275 B.R. 889 (Bk.E.D.Cal., 2002).
- In re Beverly, 374 B.R. 221 (9th Cir., B.A.P., 2011).
- In re Bloom, 839 F.2d 1376 (9th Cir., 1988).
- In re Chen, 2011 WL 2358653 (Bk.N.D.Cal., 2011).
- In re Crosby, 162 B.R. 276 (Bk.C.D.Cal., 1993).
- In re Daniel, 771 F.2d 1352 (9th Cir., 1985).
- In re Davis, 323 B.R. 732 (BAP 9th Cir., 2005).
- In re Friedman, 220 B.R. 670 (9th Cir.B.A.P., 1998).
- In re Lieberman, 245 F.3d 1090 (9th Cir., 2001).
- In re Phillips, 206 B.R. 196 (Bk.N.D.Cal., 1997).
- In re Rucker, 570 F.3d 1155 (9th Cir., 2009).
- In re Segovia, 404 B.R. 896 (2009).
- In re Simpson, 557 F.3d 1010 (2009).
- In re Stern, 345 F.3d 1036 (9th Cir., 2003).
- In re Switzer, 146 B.R. 1 (Bk.C.D.Cal., 1992).
- Marriage of La Moure, 221 Cal.App.4th 1463, 15 Cal.Rptr. 3d 417 (2013).
- McMullen v. Haycock, 147 Cal.App.4th 753, 54 Cal.Rptr. 3d 660 (2007).
- O'Brien v AMBS Diagnostics, LLC, 38 Cal.App.5th 553, 251 Cal.Rptr.3d 41 (Aug. 8, 2019).
- Salameh v. Tarsadia Hotel, 2015 WL 6028927 (S.D.Cal., 2015).
- Schwartzman v. Wilshinsky, 50 Cal.App.4th 619, 57 Cal.Rptr.2d 790 (1996).
- Tax and ERISA Issues of California Private Retirement Plans
- Voidable Transactions And California Private Retirement Plans
- Yaesu Electronics Corp. v. Tamura, 28 Cal.App.4th 8, 33 Cal.Rptr.2d 283 (1994).