Opinion
No. 05-40972-293.
July 8, 2005.
Stuart Jay Radloff, St. Louis, MO, for debtor.
A. Thomas DeWoskin, St. Louis, MO, for trustee.
ORDER
This case is before the Court on Trustee's objection to Debtor's attempt to exempt $15,000.00 that his ex-spouse owes to him pursuant to a divorce decree (the "Divorce Decree") under Missouri's homestead exemption. Because there is no link between the $15,000.00 and Debtor's portion of the equity in the real property that is the subject of the Divorce Decree, the Court will sustain Trustee's objection.
The Circuit Court of St. Louis County (the "State Court") entered the Divorce Decree on December 14, 2004. The State Court awarded the martial home (the "Martial Home") to Debtor's ex-spouse in the Divorce Decree. The State Court also gave Debtor's ex-spouse primary physical custody of the couple's four minor children. The Divorce Decree allocated the remaining martial assets between Debtor and his ex-spouse. The Divorce Decree additionally ordered both parties to pay certain martial debts, but Debtor was required to pay the vast majority of that debt. The Divorce Decree finally directs Debtor's ex-spouse to pay Debtor $23,500.00 "as and for a division of martial property" (the "Lump Sum Award").
Debtor claims that $15,000.00 ofthe Lump Sum Award is exempt from execution by Trustee under Missouri's homestead exemption. Missouri has exercised its right under 11 U.S.C. § 522(b)(2) and requires Missouri resident to utilize Missouri's set of exemption when filing for relief under the Code. Mo. Rev. Stat. § 513.427. Thus, the Court will apply Missouri's homestead exemption law to determine if Debtor may exempt the $15,000.00 in question.
Missouri law allows a judgment debtor to exempt up to $15,000.00 in value of any residence he uses as a homestead. Mo. Rev. Stat. § 513.475(1). Because the homestead must be a residence, the debtor generally must both reside and own the real property in question to claim the homestead exemption under Missouri law. In re Maloney, 311 B.R. 525, 527 (Bankr. W.D. Mo. 2004).
Here, there is no dispute that pursuant to the Divorce Decree, Debtor moved out of the Martial Home prior to filing his petition for relief under Chapter 7 of the Code. It is also undisputed that Debtor had no intention of returning to the Martial Home. Thus, it is uncontrovertedthatDebtor does not reside in the Martial Property nor does he intend to return. Debtor, however, still claims that $15,000.00 of the Lump Sum Award is exemption from administration by Trustee under Missouri's homestead exemption because that amount represents his portion of the couple's equity in the Martial Home. The Court disagrees.
Before analyzing the substantive issue in question, the Court initially observes that Bankr. R. 4003(c) establishes a presumption in favor of the validity of any claim of exemption. The burden shift to the debtor, however, to establish his entitlement to the claim of exemption once the trustee rebuts that presumption. In re Rosen, 318 B.R. 166, 169 (Bankr. D. Neb. 2004). And, under Missouri law, the debtor's physical removal from the residence in question rebuts the presumptive validity of the homestead exemption. Maloney, 311 B.R. at 528. Therefore, because Debtor does not reside in the Martial Home, he bears the burden of establishing that he is entitled to exempt the $15,000.00 under Missouri's homestead exemption. The Court finds that Debtor has failed to meet this burden.
Missouri law does provide that a debtor may claim the homestead exemption with respect to the proceeds of the sale of his residence before he reinvests those proceeds into another residence if he can demonstrate his intent to make such a reinvestment within a reasonable time. In re Huth, 122 B.R. 724, 726 (Bankr. E.D. Mo. 1988). The debtor, however, must establish some link between the money at issue and the homestead in question. In re Schissler, 250 B.R. 697, 701 (Bankr.W.D. Mo. 2000). Thus, if the money at issue is awarded in a divorce decree, the divorce decree itself must link the money with the debtor's equity in the homestead. Id.
Here, the Divorce Decree simply states that the entire Lump Sum Award was part of the division of martial property. Although the Divorce Decree did award Debtor's ex-spouse the Martial Residence, there is nothing in the Divorce Decree that links any portion of the Lump Sum Award to Debtor's portion of the equity in the Martial Home. The Court notes that State Court may have awarded Debtor the Lump Sum Award for a number of reasons apart from allocating the equity in the Martial Home. For example, the State Court may have awarded Debtor the Lump Sum Award to offset the fact that it ordered him to pay the vast majority of the martial debt. The Court additionally notes that Debtor has failed to produce any evidence as to the amount, if any, of the couple's equity in the MartialHome at the time of the Divorce Decree.
Given this thin evidentiary record, any link between the Lump Sum Award and Debtor's portion of the equity in the Martial Home would be pure speculation. Therefore, Debtor has failed to establish that he is entitled to Missouri's homestead exemption with respect to any portion of the Martial Home. Therefore, the Court will sustain Trustee's objection. Accordingly,
IT IS HEREBY ORDERD that Trustee's Objection to Debtor's Claim of Exemption (Document No. 6) is SUSTAINED.