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First Substitute H.B. 149

Representative Earl D. Tanner proposes the following substitute bill:


             1     
AMENDMENTS TO UTAH EXEMPTIONS ACT

             2     
2013 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Earl D. Tanner

             5     
Senate Sponsor: Todd Weiler

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill makes changes and additions to the Utah Exemptions Act for bankruptcy.
             10      Highlighted Provisions:
             11          This bill:
             12          .    updates dollar amounts for a debtor's primary personal residence and certain
             13      personal property;
             14          .    adds an exemption for firearms and ammunition;
             15          .    provides an exemption for unpaid earnings;
             16          .    exempts a motor vehicle used by an individual in the individual's business, trade, or
             17      profession; and
             18          .    permits certain nonresidents to use the federal exemptions.
             19      Money Appropriated in this Bill:
             20          None
             21      Other Special Clauses:
             22          None
             23      Utah Code Sections Affected:
             24      AMENDS:
             25          78B-5-503, as last amended by Laws of Utah 2010, Chapter 131


             26          78B-5-505, as renumbered and amended by Laws of Utah 2008, Chapter 3
             27          78B-5-506, as renumbered and amended by Laws of Utah 2008, Chapter 3
             28          78B-5-513, as renumbered and amended by Laws of Utah 2008, Chapter 3
             29     
             30      Be it enacted by the Legislature of the state of Utah:
             31          Section 1. Section 78B-5-503 is amended to read:
             32           78B-5-503. Homestead exemption -- Definitions -- Excepted obligations -- Water
             33      rights and interests -- Conveyance -- Sale and disposition -- Property right for federal tax
             34      purposes.
             35          (1) For purposes of this section:
             36          (a) "Household" means a group of persons related by blood or marriage living together
             37      in the same dwelling as an economic unit, sharing furnishings, facilities, accommodations, and
             38      expenses.
             39          (b) "Mobile home" is as defined in Section 57-16-3 .
             40          (c) "Primary personal residence" means a dwelling or mobile home, and the land
             41      surrounding it, not exceeding one acre, as is reasonably necessary for the use of the dwelling or
             42      mobile home, in which the individual and the individual's household reside.
             43          (d) "Property" means:
             44          (i) a primary personal residence;
             45          (ii) real property; or
             46          (iii) an equitable interest in real property awarded to a person in a divorce decree by a
             47      court.
             48          (2) (a) An individual is entitled to a homestead exemption consisting of property in this
             49      state in an amount not exceeding:
             50          (i) $5,000 in value if the property consists in whole or in part of property which is not
             51      the primary personal residence of the individual; or
             52          (ii) [$20,000] $30,000 in value if the property claimed is the primary personal
             53      residence of the individual.
             54          (b) If the property claimed as exempt is jointly owned, each joint owner is entitled to a
             55      homestead exemption; however
             56          (i) for property exempt under Subsection (2)(a)(i), the maximum exemption may not


             57      exceed $10,000 per household; or
             58          (ii) for property exempt under Subsection (2)(a)(ii), the maximum exemption may not
             59      exceed [$40,000] $60,000 per household.
             60          (c) A person may claim a homestead exemption in either or both of the following:
             61          (i) one or more parcels of real property together with appurtenances and improvements;
             62      or
             63          (ii) a mobile home in which the claimant resides.
             64          (d) A person may not claim a homestead exemption for property that the person
             65      acquired as a result of criminal activity.
             66          (3) A homestead is exempt from judicial lien and from levy, execution, or forced sale
             67      except for:
             68          (a) statutory liens for property taxes and assessments on the property;
             69          (b) security interests in the property and judicial liens for debts created for the purchase
             70      price of the property;
             71          (c) judicial liens obtained on debts created by failure to provide support or maintenance
             72      for dependent children; and
             73          (d) consensual liens obtained on debts created by mutual contract.
             74          (4) (a) Except as provided in Subsection (4)(b), water rights and interests, either in the
             75      form of corporate stock or otherwise, owned by the homestead claimant are exempt from
             76      execution to the extent that those rights and interests are necessarily employed in supplying
             77      water to the homestead for domestic and irrigating purposes.
             78          (b) Those water rights and interests are not exempt from calls or assessments and sale
             79      by the corporations issuing the stock.
             80          (5) (a) When a homestead is conveyed by the owner of the property, the conveyance
             81      may not subject the property to any lien to which it would not be subject in the hands of the
             82      owner.
             83          (b) The proceeds of any sale, to the amount of the exemption existing at the time of
             84      sale, is exempt from levy, execution, or other process for one year after the receipt of the
             85      proceeds by the person entitled to the exemption.
             86          (6) The sale and disposition of one homestead does not prevent the selection or
             87      purchase of another.


             88          (7) For purposes of any claim or action for taxes brought by the United States Internal
             89      Revenue Service, a homestead exemption claimed on real property in this state is considered to
             90      be a property right.
             91          Section 2. Section 78B-5-505 is amended to read:
             92           78B-5-505. Property exempt from execution.
             93          (1) (a) An individual is entitled to exemption of the following property:
             94          (i) a burial plot for the individual and the individual's family;
             95          (ii) health aids reasonably necessary to enable the individual or a dependent to work or
             96      sustain health;
             97          (iii) benefits the individual or the individual's dependent have received or are entitled
             98      to receive from any source because of:
             99          (A) disability;
             100          (B) illness; or
             101          (C) unemployment;
             102          (iv) benefits paid or payable for medical, surgical, or hospital care to the extent they are
             103      used by an individual or the individual's dependent to pay for that care;
             104          (v) veterans benefits;
             105          (vi) money or property received, and rights to receive money or property for child
             106      support;
             107          (vii) money or property received, and rights to receive money or property for alimony
             108      or separate maintenance, to the extent reasonably necessary for the support of the individual
             109      and the individual's dependents;
             110          (viii) (A) one:
             111          (I) clothes washer and dryer;
             112          (II) refrigerator;
             113          (III) freezer;
             114          (IV) stove;
             115          (V) microwave oven; and
             116          (VI) sewing machine;
             117          (B) all carpets in use;
             118          (C) provisions sufficient for 12 months actually provided for individual or family use;


             119          (D) all wearing apparel of every individual and dependent, not including jewelry or
             120      furs; and
             121          (E) all beds and bedding for every individual or dependent;
             122          (ix) except for works of art held by the debtor as part of a trade or business, works of
             123      art:
             124          (A) depicting the debtor or the debtor and his resident family; or
             125          (B) produced by the debtor or the debtor and his resident family;
             126          (x) proceeds of insurance, a judgment, or a settlement, or other rights accruing as a
             127      result of bodily injury of the individual or of the wrongful death or bodily injury of another
             128      individual of whom the individual was or is a dependent to the extent that those proceeds are
             129      compensatory;
             130          (xi) the proceeds or benefits of any life insurance contracts or policies paid or payable
             131      to the debtor or any trust of which the debtor is a beneficiary upon the death of the spouse or
             132      children of the debtor, provided that the contract or policy has been owned by the debtor for a
             133      continuous unexpired period of one year;
             134          (xii) the proceeds or benefits of any life insurance contracts or policies paid or payable
             135      to the spouse or children of the debtor or any trust of which the spouse or children are
             136      beneficiaries upon the death of the debtor, provided that the contract or policy has been in
             137      existence for a continuous unexpired period of one year;
             138          (xiii) proceeds and avails of any unmatured life insurance contracts owned by the
             139      debtor or any revocable grantor trust created by the debtor, excluding any payments made on
             140      the contract during the one year immediately preceding a creditor's levy or execution;
             141          (xiv) except as provided in Subsection (1)(b), any money or other assets held for or
             142      payable to the individual as a participant or beneficiary from or an interest of the individual as
             143      a participant or beneficiary in a retirement plan or arrangement that is described in Section
             144      401(a), 401(h), 401(k), 403(a), 403(b), 408, 408A, 409, 414(d), [or] 414(e), or 457, Internal
             145      Revenue Code; [and]
             146          (xv) the interest of or any money or other assets payable to an alternate payee under a
             147      qualified domestic relations order as those terms are defined in Section 414(p), Internal
             148      Revenue Code[.]; and
             149          (xvi) unpaid earnings of the household of the filing individual due as of the date of the


             150      filing of a bankruptcy petition in the amount of 1/24 of the Utah State annual median family
             151      income for the household size of the filing individual as determined by the Utah State annual
             152      Median Family Income reported by the United States Census Bureau and as adjusted based
             153      upon the Consumer Price Index for All Urban Consumers for individual whose unpaid earnings
             154      are paid more often than once a month or, if unpaid earnings are not paid more often than once
             155      a month, then in the amount of 1/12 of the Utah State annual median family income for the
             156      household size of the individual as determined by the Utah State Annual Median Family
             157      Income reported by the United States Census Bureau and as adjusted based upon the Consumer
             158      Price Index for All Urban Consumers.
             159          (b) The exemption granted by Subsection (1)(a)(xiv) does not apply to:
             160          (i) an alternate payee under a qualified domestic relations order, as those terms are
             161      defined in Section 414(p), Internal Revenue Code; or
             162          (ii) amounts contributed or benefits accrued by or on behalf of a debtor within one year
             163      before the debtor files for bankruptcy. This may not include amounts directly rolled over from
             164      other funds which are exempt from attachment under this section.
             165          (2) The exemptions in Subsections (1)(a)(xi), (xii), and (xiii) do not apply to proceeds
             166      and avails of any matured or unmatured life insurance contract assigned or pledged as collateral
             167      for repayment of a loan or other legal obligation.
             168          (3) Exemptions under this section do not limit items that may be claimed as exempt
             169      under Section 78B-5-506 .
             170          Section 3. Section 78B-5-506 is amended to read:
             171           78B-5-506. Value of exempt property -- Exemption of implements, professional
             172      books, tools, and motor vehicles.
             173          (1) An individual is entitled to exemption of the following property up to an aggregate
             174      value of items in each subsection of [$500] $1,000:
             175          (a) sofas, chairs, and related furnishings reasonably necessary for one household;
             176          (b) dining and kitchen tables and chairs reasonably necessary for one household;
             177          (c) animals, books, and musical instruments, if reasonably held for the personal use of
             178      the individual or [his] the individual's dependents; [and]
             179          (d) heirlooms or other items of particular sentimental value to the individual[.]; and
             180          (e) firearms and ammunition not included in other exemption categories in the amount


             181      of $250 per individual, and not more than $500 per household.
             182          (2) An individual is entitled to an exemption, not exceeding [$3,500] $5,000 in
             183      aggregate value, of implements, professional books, or tools of [his] the individual's trade,
             184      including motor vehicles to which no other exemption has been applied, and that are actually
             185      used by the individual in the individual's principal business, trade, or profession.
             186          (3) (a) As used in this Subsection (3), "motor vehicle" does not include any motor
             187      vehicle designed for or used primarily for recreational purposes, such as:
             188          (i) an off-highway vehicle as defined in Section 41-22-2 , except a motorcycle the
             189      individual regularly uses for daily transportation; or
             190          (ii) a recreational vehicle as defined in Section 13-14-102 , except a van the individual
             191      regularly uses for daily transportation.
             192          (b) An individual is entitled to an exemption, not exceeding [$2,500] $3,000 in value,
             193      of one motor vehicle.
             194          (4) This section does not affect property exempt under Section 78B-5-505 .
             195          Section 4. Section 78B-5-513 is amended to read:
             196           78B-5-513. Exemption provisions applicable in bankruptcy proceedings.
             197          [No] An individual may not exempt from the property of the estate in any bankruptcy
             198      proceeding the property specified in Subsection (d) of Section 522 of the Bankruptcy Reform
             199      Act (Public Law 95-598), [except as expressly permitted under this part] unless the individual
             200      is a nonresident of this state and has been for the 180 days immediately preceding filing for
             201      bankruptcy.


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