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 Post subject: Lane: IRA Cannot Be Used To Shield Assets - Child Support
PostPosted: Fri Feb 17, 2012 7:35 am 
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Marriage of Lane, 2012 WL 502259 (Cal.App. 2 Dist., Unpublished, Feb. 15, 2012).

Not Officially Published -- (Cal. Rules of Court, Rules 8.1105 and 8.1110, 8.1115)

In re Marriage of VIKKI M. and ROBERT M. LANE.

VIKKI M. LANE, Respondent.

v.

Robert M. Lane, Appellant.

2d Civil No. B228801

Court of Appeal,

Second District, California.

Filed February 15, 2012

Thomas P. Anderle, Judge, Superior Court County of Santa Barbara, (Super.Ct. No. 1093841) (Santa Barbara County)

Robert M. Lane, in pro. per. for Appellant.

Griffith & Thornburgh, Bruce Glesby and Marisa K. Beuoy for Respondent.

COFFEE, J.FN*

FN*. Retired Associate Justice of the Court of Appeal, Second Appellate District, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.

Robert M. Lane appeals from an order requiring him to turn over funds held in an individual retirement account (IRA) to the Santa Barbara Sheriff's department, as levying officer, in order to satisfy a child support judgment, with delinquency penalties, in the amount of $217,838.87. Robert FN1 contends that (1) service of the turnover motion was improper because it did not include notice of levy or a list of exemptions, (2) an IRA cannot be levied upon, (3) the court erroneously included delinquency penalties in the money judgment, (4) the court erroneously disregarded recorded liens against the IRA arising from secured loans to third parties, and (5) the turnover violates a prenuptial agreement between the parties. We affirm.

FN1. In the interest of clarity, we refer to the parties by their first names.

FACTUAL AND PROCEDURAL BACKGROUND

We previously affirmed the underlying judgment, which required Robert to pay child support in the amount of $6,000 per month to his ex-wife, Vikki Lane. ( In re Marriage of Lane (Jan. 13, 2011, B215911) [nonpub. opn.] [" Lane I "].) We subsequently affirmed several post-judgment orders. ( In re Marriage of Lane (Apr. 18, 2011, B221646) [nonpub. opn.] [" Lane II "].) Most recently, we affirmed an order approving Vikki's proposed qualified domestic relations order (QDRO) relating to child support. ( In re Marriage of Lane (November 28, 2011, B224556) [nonpub. opn.] [" Lane III "].)

Robert has not satisfied his child support obligations. Interest and statutory penalties have accrued. In September 2010, Vikki obtained a writ of execution, requiring the sheriff, as levying officer, to enforce the support judgment. (Code Civ. Proc., secs. 699.510, subd. (a); 699.520.) FN2 Vikki then moved the court for an order that would require Robert to turn over to the levying officer funds held in his IRA to satisfy the judgment. (sec. 699.040.) An IRA account statement shows a balance of $454,000 as of August 31, 2008.

FN2. All statutory references are to the Code of Civil Procedure unless otherwise stated.

Robert was personally served with the turnover motion and a blank responsive declaration in the courthouse hallway on September 7, 2010, and his counsel was personally served the same day with a copy of the motion. Robert opposed the motion on the ground that it was not properly served. The trial court granted the motion, and ordered Robert to turn over the IRA funds.

DISCUSSION

A judgment creditor may obtain a writ of execution, requiring the county sheriff, as levying officer, to enforce the judgment. (secs. 699.510, subd. (a); 699.520.) The levying officer levies upon property by either taking it into custody or placing a lien on it (sec. 700.015 et seq.), after which the property may be sold or otherwise disposed of to satisfy the judgment. (sec. 701.510 et seq.) If the creditor anticipates that the levying officer will have difficulty levying upon certain property (for example, where the property is in a private place or hidden) the creditor may obtain a turnover order to facilitate the levy. (sec. 699.040.) The creditor may request the turnover order by ex parte application or noticed motion, and there are no special service requirements. (sec. 699.040, subd. (a).) If the court issues a turnover order, that order must be personally served on the debtor with notice that failure to comply is punishable by contempt. (sec. 699.040, subd. (c).)

"At the time of levy," the levying officer must serve the debtor with documents that include a notice of levy and a list of exemptions. (sec. 700.010, subd. (a)(3).) Within 10 days of service, the judgment debtor must file any claim of exemption.FN3 (sec. 703.520, subd. (a).) The levying officer will not dispose of the property during those 10 days. If the creditor opposes a claim of exemption, the court will conduct a hearing on the claim of exemption. (secs. 703.570; 703.580.) The levying officer will not dispose of the property until the claim is determined, absent court order. (sec. 703.610.)

FN3. Exceptions exist but do not apply here.

Funds held in a qualified IRA are exempt from judgment enforcement to the extent necessary to support the debtor and his dependants when he retires, taking into account all other resources likely to be available to him upon retirement. (sec. 704.115, subds.(a)(3), (e) & (f).) The exemption only applies if the IRA is principally designed and created for retirement purposes. ( In re Dudley (9th Cir.2001) 249 F.3d 1170, 1176.) Shielding assets is not a retirement purpose. ( Id. at p. 1177; In re Daniel (9th Cir.1985) 771 F.2d 1352, 1358, disapproved on other grounds in Patterson v. Shumate (1992) 504 U.S. 753, 757, fn. 1.) In the case of a child support or spousal support judgment, the exemption is limited: the court may, upon noticed motion, determine the extent to which funds in the IRA account should be applied to satisfy the support judgment, taking into account all circumstances including the needs of the creditor, the debtor, and all persons he is required to support. (sec. 703.070; 704.115, subd. (c).)

Service

Personal service of the motion for turnover upon Robert was sufficient. (sec. 699.040.) Robert's contention that service of the turnover motion was improper because he was not served with a notice of levy and other items listed in section 700.010, subdivision (a)(1), is without merit because section 700.010 does not apply until the "time of levy."

Robert's contention that he has been precluded from claiming an exemption is also without merit. His time to claim an exemption will not arise until he has turned the property over to the levying officer (or the levying officer has otherwise levied upon it) and the officer has served him with notice of the levy. (secs. 700.010, subd. (a)(3); 703.520, subd. (a).)

Levy Against An IRA

All of Robert's property, including the IRA, is subject to levy except as provided by law. (sec. 695.010, subd. (a).) We reject Robert's contention that an IRA cannot be levied upon because IRA's are not among the types of property listed in section 700.180. That section does not restrict the types of property that may be levied upon. It only provides that certain property, such as land and crops, may be levied upon even where they are the subject of a pending action.

Delinquency Penalties

Robert's delinquency penalties were properly included in the judgment. (Fam.Code, sec. 4725.) He contends that they should not be included in the amount required to satisfy the judgment because penalties are not listed in section 695.210. That section provides that the amount required to satisfy a judgment consists of the judgment, plus costs and interests, minus amounts that are unenforceable or already satisfied. Here, the judgment includes penalties, as authorized by Family Code section 4725. Section 4725 provides that the support creditor may obtain a judgment for "child support, ... arrearages, interest, or penalty," if unpaid 30 days after notice of delinquency. Vikki obtained a judgment that included penalties, and the entire judgment is "enforceable in any manner provided by law." ( Ibid.)

Competing Liens

We also reject Robert's contention that the turnover order erroneously ignores third party liens against his IRA, arising from a 2005 loan secured by all of Robert's assets, and that, under a Wyoming statute, property subject to a perfected lien shall not be sold or removed without the lien holder's consent. To the extent any third party has a secured interest in the IRA funds, that party's interest may be determined after levy. (sec. 701.040.)

Prenuptial Agreement

We previously rejected Robert's contention that the judgment in this dissolution case is not enforceable against his separate property pursuant to the prenuptial agreement. ( Lane II.)

DISPOSITION

The order appealed from is affirmed. Respondent is entitled to her costs on appeal.

We concur:

YEGAN, Acting P.J.

PERREN, J.


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