09-15224 In re Bronk

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Bankruptcy
Exemptions; EdVest

EdVest College Savings Plans are not exempt property in bankruptcy.

“It is certainly not inconceivable that the Wisconsin legislature intended to create an unlimited exemption for college savings accounts and that the ‘account owner’ would be entitled to claim that exemption. But as the cited authorities indicate, there are a number of states which have opted not to protect these accounts at all, while others have added various protections to deter possible abuse. Consequently, it is also possible that the legislature only wished to extend protection to the beneficiary. Construing the relevant statutes together, in context, as the Wisconsin Supreme Court has indicated should be done, leads to the conclusion that only the ‘beneficiary’s right’ to qualified withdrawals from a college savings account under § 14.64 are exempt under § 815.18(3)(p).29 Any other result would ignore the distinctions the legislature made between the ‘monies deposited’ and the ‘beneficiary’s right’ to withdrawals found in §§ 14.63(8) and 14.64(7), and would also render both of those sections superfluous. As such, Mr. Bronk is not entitled to claim the accounts as exempt. Since the accounts are nonexempt property of the estate, the trustee is entitled to the turnover of the funds so that they may be distributed to creditors.”

09-15224 In re Bronk

W.D.Wis., Utschig, Bankr. J.