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S.B. 42





Sponsor: David L. Gladwell

             6      LONG TITLE
             7      General Description:
             8          This bill makes changes to the Utah Exemptions Act.
             9      Highlighted Provisions:
             10          This bill:
             11          .    clarifies that a mobile home may be considered a primary residence under the
             12      homestead exemption; and
             13          .    states that funds rolled over from an exempt retirement fund into another exempt
             14      retirement fund are exempt in bankruptcy proceedings.
             15      Monies Appropriated in this Bill:
             16          None
             17      Other Special Clauses:
             18          None
             19      Utah Code Sections Affected:
             20      AMENDS:
             21          78-23-3, as last amended by Chapter 370, Laws of Utah 1999
             22          78-23-5, as last amended by Chapter 370, Laws of Utah 1999
             24      Be it enacted by the Legislature of the state of Utah:
             25          Section 1. Section 78-23-3 is amended to read:
             26           78-23-3. Homestead exemption -- Definitions -- Excepted obligations -- Water
             27      rights and interests -- Conveyance -- Sale and disposition -- Property right for federal tax

             28      purposes.
             29          (1) For purposes of this section:
             30          (a) "household" means a group of persons related by blood or marriage living together
             31      in the same dwelling as an economic unit, sharing furnishings, facilities, accommodations, and
             32      expenses;
             33          (b) "primary personal residence" means a dwelling or mobile home, and the land
             34      surrounding it, not exceeding one acre, as is reasonably necessary for the use of the dwelling or
             35      mobile home, in which the individual and the individual's household reside; and
             36          (c) "property" means:
             37          (i) a primary personal residence;
             38          (ii) real property; or
             39          (iii) an equitable interest in real property awarded to a person in a divorce decree by a
             40      court.
             41          (2) (a) An individual is entitled to a homestead exemption consisting of property in this
             42      state in an amount not exceeding:
             43          (i) $5,000 in value if the property consists in whole or in part of property which is not
             44      the primary personal residence of the individual; or
             45          (ii) $20,000 in value if the property claimed is the primary personal residence of the
             46      individual.
             47          (b) If the property claimed as exempt is jointly owned, each joint owner is entitled to a
             48      homestead exemption; however
             49          (i) for property exempt under Subsection (2)(a)(i), the maximum exemption may not
             50      exceed $10,000 per household; or
             51          (ii) for property exempt under Subsection (2)(a)(ii), the maximum exemption may not
             52      exceed $40,000 per household.
             53          (c) A person may claim a homestead exemption in either or both of the following:
             54          (i) one or more parcels of real property together with appurtenances and improvements;
             55      or
             56          (ii) a mobile home in which the claimant resides.
             57          (3) A homestead is exempt from judicial lien and from levy, execution, or forced sale
             58      except for:

             59          (a) statutory liens for property taxes and assessments on the property;
             60          (b) security interests in the property and judicial liens for debts created for the purchase
             61      price of the property;
             62          (c) judicial liens obtained on debts created by failure to provide support or maintenance
             63      for dependent children; and
             64          (d) consensual liens obtained on debts created by mutual contract.
             65          (4) (a) Except as provided in Subsection (4)(b), water rights and interests, either in the
             66      form of corporate stock or otherwise, owned by the homestead claimant are exempt from
             67      execution to the extent that those rights and interests are necessarily employed in supplying
             68      water to the homestead for domestic and irrigating purposes.
             69          (b) Those water rights and interests are not exempt from calls or assessments and sale
             70      by the corporations issuing the stock.
             71          (5) (a) When a homestead is conveyed by the owner of the property, the conveyance
             72      may not subject the property to any lien to which it would not be subject in the hands of the
             73      owner.
             74          (b) The proceeds of any sale, to the amount of the exemption existing at the time of
             75      sale, is exempt from levy, execution, or other process for one year after the receipt of the
             76      proceeds by the person entitled to the exemption.
             77          (6) The sale and disposition of one homestead does not prevent the selection or
             78      purchase of another.
             79          (7) For purposes of any claim or action for taxes brought by the United States Internal
             80      Revenue Service, a homestead exemption claimed on real property in this state is considered to
             81      be a property right.
             82          Section 2. Section 78-23-5 is amended to read:
             83           78-23-5. Property exempt from execution.
             84          (1) (a) An individual is entitled to exemption of the following property:
             85          (i) a burial plot for the individual and his family;
             86          (ii) health aids reasonably necessary to enable the individual or a dependent to work or
             87      sustain health;
             88          (iii) benefits the individual or his dependent have received or are entitled to receive
             89      because of disability, illness, or unemployment from any source;

             90          (iv) benefits paid or payable for medical, surgical, or hospital care to the extent they are
             91      used by an individual or his dependent to pay for that care;
             92          (v) veterans benefits;
             93          (vi) money or property received, and rights to receive money or property for child
             94      support;
             95          (vii) one clothes washer and dryer, one refrigerator, one freezer, one stove, one
             96      microwave oven, one sewing machine, all carpets in use, provisions sufficient for 12 months
             97      actually provided for individual or family use, all wearing apparel of every individual and
             98      dependent, not including jewelry or furs, and all beds and bedding for every individual or
             99      dependent;
             100          (viii) works of art depicting the debtor or the debtor and his resident family, or
             101      produced by the debtor or the debtor and his resident family, except works of art held by the
             102      debtor as part of a trade or business;
             103          (ix) proceeds of insurance, a judgment, or a settlement, or other rights accruing as a
             104      result of bodily injury of the individual or of the wrongful death or bodily injury of another
             105      individual of whom the individual was or is a dependent to the extent that those proceeds are
             106      compensatory;
             107          (x) except as provided in Subsection (1)(b), any money or other assets held for or
             108      payable to the individual as a participant or beneficiary from or an interest of the individual as
             109      a participant or beneficiary in a retirement plan or arrangement that is described in Section
             110      401(a), 401(h), 401(k), 403(a), 403(b), 408, 408A, 409, 414(d), or 414(e) of the United States
             111      Internal Revenue Code of 1986, as amended; and
             112          (xi) the interest of or any money or other assets payable to an alternate payee under a
             113      qualified domestic relations order as those terms are defined in Section 414(p) of the United
             114      States Internal Revenue Code of 1986, as amended.
             115          (b) The exemption granted by Subsection (1)(a)(x) does not apply to:
             116          (i) an alternate payee under a qualified domestic relations order, as those terms are
             117      defined in Section 414(p) of the United States Internal Revenue Code of 1986, as amended; or
             118          (ii) amounts contributed or benefits accrued by or on behalf of a debtor within one year
             119      before the debtor files for bankruptcy. This may not include amounts directly rolled over from
             120      other funds which are exempt from attachment under this section.

             121          (2) Exemptions under this section do not limit items which may be claimed as exempt
             122      under Section 78-23-8 .

Legislative Review Note
    as of 1-15-04 7:59 AM

A limited legal review of this legislation raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel

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