When it comes to bankruptcy it is important to know what properties, debt, or other money can be deemed exempt. This is especially true because property exemptions can vary from state to state, and even those can vary from federal property exemptions. The same holds true for annuities, which usually come in the form of an investment account that pays the owner on a regular basis. They are designed to provide a steady income and are used for things like insurance proceeds, rollover from a retirement account (pension, 401(k), IRA), lottery winnings, or a structured settlement from a lawsuit.
Payments can be immediate or set up to initiate when a certain life event occurs. They can be payments for a set number of years or for the life of the owner. These terms of the annuity are important when it comes to its eligibility for exemption in bankruptcy.
As mentioned earlier, exemptions tend to vary from state to state. An annuity might qualify for exemption in one state, but not make the cut in another. This can be for a variety of reasons. Consulting a bankruptcy attorney is a great first step to determine if your annuity is able to be exempt when you file.
One exemption that exists regardless of state or federal exemptions is the federal retirement exemption. This makes it so if your annuity meets the requirements of the Internal Revenue Code qualified retirement account, it can be exempt.
Another factor that can impact exemption validity is the timing of the creation of your annuity. There are states that only protect it if it was purchased more than six months before your filing of bankruptcy. This is done to keep you from purchasing an annuity solely to protect the funds from the reach of the bankruptcy court.
Bankruptcy Attorney in NJ Will Answer Your Needs
Again, exemptions can be extremely tricky when filing for bankruptcy. They vary on the state and federal level and different properties are exempt in a Chapter 7 filing than in a Chapter 13 filing. If you are looking for answers to your bankruptcy questions, you need help from the Law Office of Joel R. Spivack.
The New Jersey bankruptcy lawyer services clients across the state, making sure their bankruptcy petitions are up to par. Mr. Spivack has more than 25 years of experience successfully helping clients get the fresh financial start they need and deserve. Contact him today by filling out the online contact form.
The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.