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15.4.1.2 Does the Exemption Continue After Payment?

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  6. 15.4.1.2 Does the Exemption Continue After Payment?

15.4.1.2 Does the Exemption Continue After Payment?

The Florida exemption for disability income benefits under any policy or contract of life, health, accident or other insurance has been construed to protect benefits deposited in a bank account, if traceable.246 Minnesota and Wisconsin achieve the same result by a statutory exemption for funds traceable to certain insurance benefits.247 Ohio exempts “an interest in” certain monthly or lump-sum disability benefits, and this provision has been construed to cover traceable proceeds.248 The Indiana exemption for “proceeds or avails” continues to protect benefits after payment to the beneficiary.249 Advocates may also argue that the “paid or payable”250 or “proceeds of” language found in other statutes provides for a continuing exemption.251

Footnotes

  • 246 Parl v. Parl, 699 So. 2d 765 (Fla. Dist. Ct. App. 1997) (remanding to trial court to determine which funds in bank account were traceable to exempt disability benefits). See also Faro v. Porchester Holdings, Inc., 792 So. 2d 1262 (Fla. Dist. Ct. App. 2001) (applying Florida exemption to certificate of deposit bought with proceeds of cash surrender value of insurance policy).

  • 247 Minn. Stat. § 550.37(20); Wis. Stat. § 815.18(3)(i). See Associated Bank v. Twaiten, 2007 WL 2245756 (Minn. Ct. App. Aug. 7, 2007) (exemption for disability insurance, so far as needed for support, covers traceable proceeds in bank account).

  • 248 In re Alam, 336 B.R. 320 (Bankr. N.D. Ohio 2005) (settlement proceeds from lawsuit for disability benefits exempt as benefits paid under sickness and accident insurance; investment account funds traceable to settlement proceeds also exempt), aff’d, 359 B.R. 142 (B.A.P. 6th Cir. 2006).

  • 249 In re Davis, 527 B.R. 319 (Bankr. N.D. Ind. 2015).

  • 250 See Philpott v. Essex Cty. Welfare Bd., 409 U.S. 413, 93 S. Ct. 590, 34 L. Ed. 2d 608 (1973) (interpreting this language to protect bank accounts traceable to exempt benefits). See generally § 14.5.3.1, supra.

  • 251 See generally § 13.3.3, supra (protection of proceeds of sale of exempt property).