First Substitute H.B. 121

Senator Lyle W. Hillyard proposes the following substitute bill:

1 PROPERTY EXEMPT FROM EXECUTION
2 2005 GENERAL SESSION
3 STATE OF UTAH
4 Sponsor: James A. Dunnigan
5
6 LONG TITLE
7 General Description:
8 This bill modifies the Judicial Code to include additional benefits and contracts as
9 exempt from judgment execution, and makes technical changes.
10 Highlighted Provisions:
11 This bill:
12 . adds the following to the list of property exempt from judgment execution:
13 . alimony and separate maintenance payments;
14 . life insurance benefits;
15 . proceeds of unmatured life insurance contracts owned by the individual, unless
16 pledged or used as collateral; and
17 . disability plan payments with specific criteria; and
18 . allows for the exemption of the traceable proceeds from the execution of a judgment
19 on any of the property listed above for one year under specific circumstances.
20 Monies Appropriated in this Bill:
21 None
22 Other Special Clauses:
23 None
24 Utah Code Sections Affected:
25 AMENDS:

26 78-23-5, as last amended by Chapter 135, Laws of Utah 2004
27 78-23-9, as last amended by Chapter 13, Laws of Utah 1998
28 REPEALS:
29 78-23-6, as enacted by Chapter 111, Laws of Utah 1981
30 78-23-7, as last amended by Chapter 38, Laws of Utah 2001
31
32 Be it enacted by the Legislature of the state of Utah:
33 Section 1. Section 78-23-5 is amended to read:
34 78-23-5. Property exempt from execution.
35 (1) (a) An individual is entitled to exemption of the following property:
36 (i) a burial plot for the individual and [his] the individual's family;
37 (ii) health aids reasonably necessary to enable the individual or a dependent to work or
38 sustain health;
39 (iii) benefits the individual or [his] the individual's dependent have received or are
40 entitled to receive [because of disability, illness, or unemployment] from any source[;] because
41 of:
42 (A) disability;
43 (B) illness; or
44 (C) unemployment;
45 (iv) benefits paid or payable for medical, surgical, or hospital care to the extent they are
46 used by an individual or [his] the individual's dependent to pay for that care;
47 (v) veterans benefits;
48 (vi) money or property received, and rights to receive money or property for child
49 support;
50 (vii) money or property received, and rights to receive money or property for alimony
51 or separate maintenance, to the extent reasonably necessary for the support of the individual
52 and the individual's dependents;
53 [(vii)] (viii) (A) one:
54 (I) clothes washer and dryer[, one];
55 (II) refrigerator[, one];
56 (III) freezer[, one];

57 (IV) stove[, one];
58 (V) microwave oven[, one];
59 (VI) sewing machine[,];
60 (B) all carpets in use[,];
61 (C) provisions sufficient for 12 months actually provided for individual or family
62 use[,];
63 (D) all wearing apparel of every individual and dependent, not including jewelry or
64 furs[,]; and
65 (E) all beds and bedding for every individual or dependent;
66 [(viii) works of art]
67 (ix) except for works of art held by the debtor as part of a trade or business, works of
68 art:
69 (A) depicting the debtor or the debtor and his resident family[,]; or
70 (B) produced by the debtor or the debtor and his resident family[, except works of art
71 held by the debtor as part of a trade or business];
72 [(ix)] (x) proceeds of insurance, a judgment, or a settlement, or other rights accruing as
73 a result of bodily injury of the individual or of the wrongful death or bodily injury of another
74 individual of whom the individual was or is a dependent to the extent that those proceeds are
75 compensatory;
76 (xi) the proceeds or benefits of any life insurance contracts or policies paid or payable
77 to the debtor upon the death of the spouse or children of the debtor;
78 (xii) the proceeds or benefits of any life insurance contracts or policies paid or payable
79 to the spouse or children of the debtor upon the death of the debtor;
80 (xiii) proceeds and avails of any unmatured life insurance contracts owned by the
81 debtor;
82 [(x)] (xiv) except as provided in Subsection (1)(b), any money or other assets held for
83 or payable to the individual as a participant or beneficiary from or an interest of the individual
84 as a participant or beneficiary in a retirement plan or arrangement that is described in Section
85 401(a), 401(h), 401(k), 403(a), 403(b), 408, 408A, 409, 414(d), or 414(e) [of the United
86 States], Internal Revenue Code [of 1986, as amended]; and
87 [(xi)] (xv) the interest of or any money or other assets payable to an alternate payee

88 under a qualified domestic relations order as those terms are defined in Section 414(p) [of the
89 United States], Internal Revenue Code [of 1986, as amended].
90 (b) The exemption granted by Subsection (1)(a)[(x)](xiv) does not apply to:
91 (i) an alternate payee under a qualified domestic relations order, as those terms are
92 defined in Section 414(p) [of the United States], Internal Revenue Code [of 1986, as amended];
93 or
94 (ii) amounts contributed or benefits accrued by or on behalf of a debtor within one year
95 before the debtor files for bankruptcy. This may not include amounts directly rolled over from
96 other funds which are exempt from attachment under this section.
97 (2) The exemptions in Subsections (1)(a)(xi), (xii), and (xiii) do not apply to proceeds
98 and avails of any matured or unmatured life insurance contract assigned or pledged as collateral
99 for repayment of a loan or other legal obligation.
100 [(2)] (3) Exemptions under this section do not limit items [which] that may be claimed
101 as exempt under Section 78-23-8 .
102 Section 2. Section 78-23-9 is amended to read:
103 78-23-9. Exemption of proceeds from property sold, taken by condemnation, lost,
104 damaged, or destroyed -- Tracing exempt property and proceeds.
105 (1) (a) [If] An individual who owned property described in this Subsection (1) is
106 entitled to an exemption of proceeds that are traceable for one year after the compensation for
107 the property is received if:
108 (i) (A) the property, or a part [thereof] of the property, [that] could have been claimed
109 exempt under Subsection 78-23-5 (1)(a)(i) or (ii)[,]; or
110 (B) the property is personal property subject to a value limitation under Subsection
111 78-23-8 (1)(a), (b), or (c); and
112 (ii) the property has been:
113 (A) sold or taken by condemnation[,]; or [has been]
114 (B) lost, damaged, or destroyed; and
115 (C) the owner has been compensated [therefor, the individual is entitled to an
116 exemption of proceeds that are traceable for one year after the proceeds are received] for the
117 property.
118 (b) The exemption of proceeds under this Subsection (1) does not entitle the individual

119 to claim an aggregate exemption in excess of the value limitation otherwise allowable under
120 Section 78-23-3 or 78-23-8 .
121 (2) Money or other property exempt under Subsection 78-23-5 (1)(a)(iii), (iv), (v), [or]
122 (vi), [or exempt to the extent reasonably necessary for support under Section 78-23-6 ,] (vii),
123 (xiii), or (xiv) remains exempt after its receipt by, and while it is in the possession of, the
124 individual or in any other form into which it is traceable.
125 (3) Money or other property and proceeds exempt under this chapter are traceable
126 under this section by application of:
127 (a) the principle of:
128 (i) first-in first-out[,]; or
129 (ii) last-in last-out[,]; or
130 (b) any other reasonable basis for tracing selected by the individual.
131 Section 3. Repealer.
132 This bill repeals:
133 Section 78-23-6, Property exempt from execution to extent necessary for support.
134 Section 78-23-7, Exemption of unmatured life insurance contracts.