THE NEW MASSACHUSETTS EXEMPTION LAWS

Transcription

1 THE NEW MASSACHUSETTS EXEMPTION LAWS Joseph S.U. Bodoff Bodoff & Associates, P.C. Effective April 7, 2011, the third of a series of three laws went into effect in Massachusetts, making it harder for creditors of an individual to collect their debts and easier for individual debtors to stay out of bankruptcy while avoiding paying those debts. The first of these laws, which was enacted in 2007, increased the homestead exemption i.e., the amount of value in a person s primary residence protected from creditors from $300,000 to $500,000, one of the highest in the country. 1 In order to claim the homestead exemption, however, one had to file a declaration of homestead and even then the property was only protected against debts arising after the homestead declaration was filed. A second law, which became effective March 11, 2011, provides for an automatic homestead exemption of $125,000 even if the homeowner does not file a declaration of homestead, it retains the $500,000 homestead exemption for those creditors that do file, and it expands the homestead exemption to protect against debts existing prior to the declaration of homestead. The most recent law dramatically expands the scope of the personal property exemptions the first major revision of such exemptions since This article explores the most important changes in the Massachusetts exemption law, discusses the impact of those changes on debt collection and discusses how the change in the law will affect personal bankruptcies for Massachusetts residents. It is not intended to be a complete and detailed rendition of every change in the statute or a recap of all of its provisions. A verbatim reproduction of the relevant statutes is contained at the end of these materials for those interested in more detail. Changes in Massachusetts Law The following are the changes to the exemption law that are likely to have the most widespread impact: 3 Wages. One of the most significant changes in the law is the increase in the amount of wages that is exempt from garnishment. Under the old law, only $ per week of wages was exempt from the reach of creditors. Under the current law, an amount equal to the greater of 85 percent of the debtor s gross weekly wages or 50 times 2011 Bodoff & Associates, P.C. All Rights Reserved 1 This was the second major increase in the homestead exemption in just over 10 years. Prior to November 2, 2000, the homestead exemption was only $100, The Massachusetts exemption statute dates back to Other changes include: $500 in value for books (previously $200), $1,500 in value for boats and fishing gear used by a commercial fisherman (previously $500), and $300 in value for a sewing machine (previously $200).

2 The New Massachusetts Exemption Laws Page 2 the federal or state minimum hourly wage is exempt. With the Massachusetts minimum wage at $8.00 per hour, this means that a minimum of $ per week of wages is now exempt as compared to the previous limit of $ per week. And, unlike the old law, which gave the creditor every dollar earned above the fixed sum of $ per week, leaving the debtor with little money to live on, the new law allows the debtor to retain the bulk of the money earned as his or her income increases. 4 Household Contents. The old law exempted from the reach of creditors beds and bedding of the debtor and the debtor s family, one heating unit and other household furniture necessary for him and his family, not exceeding three thousand dollars in value. Under the new law, in addition to the heating unit, the debtor can exempt one stove, one refrigerator, one freezer and one hot water heater, plus other household furniture necessary for the debtor and the debtor s family, not exceeding $15,000 in value. Note that the household furniture exemption requires that the items be necessary. Computers and Televisions. One computer and one television with a resale value not to exceed $300 may now be exempted. The previous law did not provide an exemption for these items. Motor Vehicles. The motor vehicle exemption has been increased from $700 to $7,500 for most people. The vehicle must be necessary for the debtor s personal transportation or to secure or maintain employment. If the vehicle is owned or substantially used by a debtor who is handicapped or 60 years or older, then the exemption is $15, In either case, the vehicle is valued based on its wholesale resale value. Jewelry. Jewelry is now exempt from the reach of creditors, up to a value of $1,225, as long as it is held for personal, family or household use. There was no jewelry exemption under the prior law. Cash. The amount of cash, bank account deposits or deposits in investment institutions has been increased from $500 to $2,500. In addition, the new law allows a debtor to exempt $600 in value to purchase necessary provisions, up from $300 under the old law. 6 Trade Items. Tools of the trade up to $5,000 are now exempt, an increase from $500. In addition, the debtor may exempt up to $5,000 in material used in the business, an increase from $ The Massachusetts statute excludes divorce and child support orders from the protection afforded by the wage exemption. 5 The use of the phrase substantially used by is curious. If the vehicle is not owned by the debtor, then it would not be subject to the claims of his or her creditors, making the substantially used by phrase superfluous. 6 The law allows for necessary provisions or the cash to acquire them.

3 The New Massachusetts Exemption Laws Page 3 Wild Card. A new provision in the Massachusetts exemption laws is the wild card exemption, i.e., an exemption that may be applied to any asset. The debtor s aggregate interest in any personal property, not to exceed $1,000 in value, plus up to $5,000 of any unused dollar amount of the aggregate exemptions provided under the $15,000 household furniture exemption, the $5,000 tools and implements of the trade exemption and the $7,500/$15,000 motor vehicle exemption may be protected under this exemption. For most people, they will get the full additional $6, What s Left? The new exemption law adds to already liberal exemptions for real estate. For those who file a declaration of homestead $500,000 of the equity in their property is protected; for those who don t $125,000 is protected. And, if the property is owned by spouses as tenants by the entireties (and if only one of the spouses is a debtor) a creditor, for all intents and purposes, will be unable to collect from a debtor s primary residence even if the equity in the property exceeds the homestead exemption. The combination of the homestead exemption and the new personal property exemptions affords a debtor a tremendous amount of protection while making it much more difficult for creditors to collect. So, what s left? Actually, plenty, but for the average person a creditor may find it difficult to locate assets available to satisfy its claims. The following are some of the categories of assets still exposed to the claims of creditors: Fifteen percent of the debtor s gross wages if the debtor earns more than $400 per week. Equity in the debtor s residence in excess of $500,000, 8 but only if the property is not owned as tenants by the entireties. 9 Equity in other real estate. Cash, bank accounts and investment accounts in excess of $2,500. Jewelry in excess of $1,225 in value. Household goods that are not necessary. Household goods in excess of $15,000 in value. 7 Most people will claim little, if any, exemption in tools of the trade. Those who lease their cars will be able to use the motor vehicle exemption as their wild card. 8 $125,000 if a declaration of homestead is not filed. 9 As noted earlier, a tenancy by the entirety would not protect the property if both spouses are debtors.

4 The New Massachusetts Exemption Laws Page 4 Artwork. The value in a motor vehicle above $7,500 or, if the debtor is handicapped or 60 years or older, $15,000 Motor vehicles other than the one allowed exempt vehicle. Boats and airplanes. Bicycles, sporting equipment, cameras. Comparison to Federal Bankruptcy Laws The federal bankruptcy laws allow an individual debtor in a bankruptcy case to designate certain property as exempt from distribution to creditors in the bankruptcy case. In most states, including Massachusetts, the debtor may choose to claim the exemption afforded by the state of his or her residence or, alternatively, the so-called federal exemption provided for in the Bankruptcy Code. The former, quite meager, Massachusetts exemptions, made the federal exemption more attractive to most debtors in bankruptcy. The new law evens the score quite a bit and in many cases the Massachusetts law is more debtor friendly. Where Massachusetts Law Provides a Greater Exemption Real Estate. With regard to a primary residence, Massachusetts provides an automatic homestead of $125,000 and, if the debtor files a declaration of homestead, an exemption of $500,000. By contrast, the Bankruptcy Code provides for an exemption of only $21,625 in the equity in the house. 10 Under both Massachusetts law and the Bankruptcy Code s federal exemption, the primary residence owned by Massachusetts residents as tenants by the entireties is also effectively immune from execution if only one of the spouses is a debtor. Household Contents and Apparel. Massachusetts now gives the debtor an exemption in all necessary wearing apparel, beds and bedding, a heating unit, a stove, a refrigerator, a heater, a hot water heater and other necessary household furniture up to a value of $15,000. By contrast, the Bankruptcy Code does not have the necessary restriction, but it does not separately make allowance for the clothing or for the appliances (refrigerator, stove, etc.) listed in the Massachusetts statute and it limits the exemption to $525 per item and $11,525 in the aggregate. Motor Vehicles. The Bankruptcy Code provides for an exemption of $3,450 in a motor vehicle. By contrast, Massachusetts allows an exemption of $7,500 for a motor 10 $43, if husband and wife file a joint bankruptcy petition.

5 The New Massachusetts Exemption Laws Page 5 vehicle for most debtors and $15,000 if the debtor is handicapped or 60 years of age or older. Property Used in Trade or Business. The Bankruptcy Code provides for an exemption of $2,175 in implements, professional books and tools of the trade of the debtor or a dependent of the debtor. By contrast, Massachusetts gives an exemption of $5,000 for tools, implements and fixtures necessary for carrying on the trade or business of the debtor and an additional $5,000 for materials and stock designed and procured by the debtor which is necessary for carrying on the trade or business of the debtor and intended to be used or wrought therein. Where the Bankruptcy Code Provides a Greater Exemption Jewelry. The Bankruptcy Code provides for an exemption of $1, for jewelry while Massachusetts provides for an exemption of only $1, Wild Card Exemption. The Bankruptcy Code provides for an exemption in any property equal to $1,150 plus up to $10,825 of any unused amount of the exemption applied against the debtor s residence. For those debtors who do not use up more than half 11 of their federal homestead exemption, the total amount of wild card exemption is therefore $11,975. By contrast, Massachusetts provides a similar exemption in an amount limited to $1,000 plus $5,000 of the unused exemption for household furniture, tools of the trade and motor vehicles. To this amount, however, Massachusetts also has an exemption for $2,500 in cash and another $600 for household provisions or the cash to purchase household provisions. Cash can be exempted under the Bankruptcy Code only by using the wild card exemption. After making adjustments, the federal wild card exemption is $2,875 greater than the equivalent exemption under Massachusetts law, as shown by the following chart: Type Federal Massachusetts Base wild card $ 1,150 $1,000 Add-on for unused exemptions $10,825 $5,000 Cash, bank accts., investment accts. N/A $2,500 Cash to purchase household provisions N/A $ 600 Total $11,975 $9,100 Exemptions Not Covered by Massachusetts Law The following exemptions are contained in the Bankruptcy Code but not in the Massachusetts exemption statute: 11 The total federal homestead exemption is $21, The amount usable in the wild card exemption is half of that amount.

6 The New Massachusetts Exemption Laws Page 6 Life insurance contracts. Professional prescribed health aids. Various awards for personal injury and wrongful death, up to a certain amount. Payment under an insurance policy on the life of a person on whom the debtor was a dependent. Retirement Funds Both the Bankruptcy Code and Massachusetts law provide generally for the exemption of retirement funds to the extent they are exempt from taxation. The Bankruptcy Code, however, imposes a cap of $1,171,650 on money in IRAs excluding money attributable to rollover contributions. Massachusetts, on the other hand, limits the exemption in any plan maintained by an individual, whether or not self-employed, during the five year period preceding the individual s declaration of bankruptcy or entry of judgment in excess of 7 per cent of the total income of such individual for such period. 12 The Impact of the New Law For many debtors, the increased exemptions contained in Massachusetts s new law will provide them with a sufficient amount of asset protection to allow them to avoid paying their debts completely without filing for bankruptcy or to give them bargaining leverage with their creditors in the out-of-court settlement of their debts. Others may still be exposed to creditors, although perhaps in lesser amounts. Bankruptcy will still be the vehicle of choice for dealing with unmanageable debts, whether it be because the debtors are unwilling or unable to make payments to creditors in settlement of their debts, their creditors are unwilling to negotiate a settlement on satisfactory terms, or they just want to start over with a clean slate free of debt. The biggest impact that the new law has may be in bankruptcy. Prior to the new law, a debtor with a significant amount of equity in his or her residence needed to make a choice between selecting the Massachusetts exemption, which provides more protection for primary residences, or the Bankruptcy Code s federal exemption, which, until the new Massachusetts law, provided more protection for personal property. Now, it will be a rare case where a debtor will not choose the Massachusetts exemption. The result is that debtors will be able to shield more assets in bankruptcy and creditors will be paid less. 12 M.G.L. ch. 246, 28.

7 The New Massachusetts Exemption Laws Page Property Exempt from Execution. Massachusetts Exemption Statute M.G.L. ch. 235, 34 The following property of the debtor shall be exempt from seizure on execution: First, the necessary wearing apparel, beds and bedding for the debtor and the debtor's family, 1 heating unit used for warming the dwelling house, 1 stove, 1 refrigerator, 1 freezer and 1 hot water heater used primarily for the personal, family or household use of the debtor or a debtor's family and the amount each month, not exceeding $500, reasonably necessary to pay for fuel, heat, refrigeration, water, hot water and light for the debtor and the debtor's family; Second, Other household furniture necessary for the debtor and the debtor's family, not exceeding $15,000 in value; Third, The bibles, schoolbooks and library used by the debtor or the debtor's family, not exceeding $500 in value; Fourth, 2 cows, 12 sheep, 2 swine and 4 tons of hay; Fifth, Tools, implements and fixtures necessary for carrying on the trade or business of the debtor, not exceeding $5,000 in value; Sixth, Materials and stock designed and procured by the debtor which is necessary for carrying on the trade or business of the debtor and intended to be used or wrought therein, not exceeding $5,000 in value; Seventh, Provisions necessary and procured and intended for the use of the debtor's family or the money necessary therefor, not exceeding $600 in value; Eighth, 1 pew occupied by the debtor or the debtor's family in a house of public worship; provided, however, that nothing herein shall prevent the sale of a pew for the nonpayment of a tax legally imposed thereon; Ninth, Boats, fishing tackle and nets of a debtor who is a fisherman and actually used by the debtor in the course of the debtor's business, not exceeding $1,500 in value; Tenth, The uniform of an officer or soldier in the militia and the arms and accoutrements required by law to be kept by the officer or soldier; Eleventh, The rights of burial and tombs in use as repositories for the dead; Twelfth, 1 sewing machine in actual use by each debtor or by his family, not exceeding $300 each in resale value, and 1 computer and 1 television, in actual use by each debtor's family; Thirteenth, Shares in co-operative associations subject to chapter 157, not exceeding $100 in value in the aggregate; Fourteenth, Estates of homestead as defined in chapter 188 or, in lieu thereof, the amount of money each rental period, not exceeding $2,500 per month, necessary to pay the rent for the

8 The New Massachusetts Exemption Laws Page 8 dwelling unit occupied by the debtor and the debtor's family; Fifteenth, $2,500 in cash or savings or other deposits in a banking or investment institution, wages equal to the greater of 85 per cent of the debtor's gross wages or 50 times the greater of the federal or the Massachusetts hourly minimum wage for each week or portion thereof and the full amount owing or paid to a person as public assistance; Sixteenth, An automobile necessary for the debtor's personal transportation or to secure or maintain employment, not exceeding $7,500 of wholesale resale value; provided, however, that the equitable value of a vehicle owned or substantially used by debtor who is either a handicapped person or a person 60 years of age or older shall be exempt up to $15,000 in wholesale resale value; Seventeenth, The debtor's aggregate interest in any personal property, not to exceed $1,000 in value, plus up to $5,000 of any unused dollar amount of the aggregate exemptions provided under clauses Second, Fifth and Sixteenth; and Eighteenth, The debtor's aggregate interest, not to exceed $1,225 in value, in jewelry held primarily for the personal, family or household use of the debtor or the debtor's spouse or dependent. Wage and Pensions Exemption M.G.L. ch. 246, Exemption of Wages and Pensions From Attachment; Exceptions. If wages for personal labor or personal services of a defendant are attached for a debt or claim, an amount not exceeding the greater of 85 per cent of the debtor's gross wages or 50 times the greater of the federal or the Massachusetts hourly minimum wage for each week or portion thereof out of the wages then due to the defendant for labor performed or services rendered during each week for which such wages were earned but not paid shall be reserved in the hands of the trustee and shall be exempt from such attachment. Except as otherwise permitted by law, amounts held by a trustee for a defendant in a pension shall be reserved in the hands of the trustee and shall be exempt from attachment. For the purpose of this section, the word "pension" shall mean any annuity, pension, profit sharing or other retirement plan subject to the federal Employee Retirement Income Security Act of 1974, any plan maintained by one or more self-employed individuals as a Keogh Plan, so-called, any plan maintained by a corporation or other business organization pursuant to section 401(a) of the Internal Revenue Code but not subject to the federal Employee Retirement Income Security Act of 1974, any Simplified Employee Plan, annuity plan to which the provisions of section 403(b) of the Internal Revenue Code apply or an Individual Retirement Account or Annuity maintained by an individual, or any annuity or similar contract distributed from or purchased with assets distributed from any of the foregoing; provided, however, that this definition shall not apply to sums deposited, determined without regard to deposits pursuant to a rollover or transfer except to the extent protection under this section would have been limited in the absence of a rollover or transfer, in any plan maintained by an individual, whether or not self-employed, during the five year period preceding the individual's declaration of bankruptcy or entry of judgment in excess of 7 per cent of the total income of such individual for such period. The amount reserved under this section shall be paid by the trustee to the defendant in the same manner and at the same time as such amount would have been paid if no such attachment had been made. Every

9 The New Massachusetts Exemption Laws Page 9 writ of attachment shall contain a statement of the amount exempted from attachment under this section and also a direction to the trustee to pay over the exempted amount as provided in this section. The provisions of this section shall not apply in any proceeding to attach wages or a pension to satisfy a divorce, separate maintenance or child support order of a court of competent jurisdiction, and in such actions, including an action for trustee process to enforce a support order under section 36A of chapter 208, the provisions of federal law limiting the amounts which may be trusteed, assigned or attached in order to satisfy an alimony, maintenance or child support order shall apply in lieu of said provisions of this section. Property Exempt from Trustee Process M.G.L. ch. 246, 28A 28A. Certain Monies Held Exempt from Attachment. Twenty-five hundred dollars of any natural person in an account in a trust company, savings bank, cooperative bank, credit union, national banking association or other banking institution doing business in the commonwealth shall be exempt from attachment by trustee process. A trustee summons served on any such institution shall describe the exemption with reference to this section. Upon service of a trustee summons, the trustee shall answer as subject to attachment only so much money of the defendant that exceeds $2,500. No business, trust or organization shall be entitled to the exemption in this section and no natural person shall be entitled to more than a $2,500 exemption at any one time. In any action, the plaintiff may apply to the court for further attachments upon proof by certified records of a trustee that the defendant has received an exemption not authorized under this section or that the $2,500 exemption of the defendant has been in whole or in part exhausted or exceeded.

10 The New Massachusetts Exemption Laws Page Exemptions Federal Bankruptcy Exemptions 11 U.S.C. 522 (a) In this section-- (1) "dependent" includes spouse, whether or not actually dependent; and (2) "value" means fair market value as of the date of the filing of the petition or, with respect to property that becomes property of the estate after such date, as of the date such property becomes property of the estate. (b) (1) Notwithstanding section 541 of this title, an individual debtor may exempt from property of the estate the property listed in either paragraph (2) or, in the alternative, paragraph (3) of this subsection. In joint cases filed under section 302 of this title and individual cases filed under section 301 or 303 of this title by or against debtors who are husband and wife, and whose estates are ordered to be jointly administered under Rule 1015(b) of the Federal Rules of Bankruptcy Procedure, one debtor may not elect to exempt property listed in paragraph (2) and the other debtor elect to exempt property listed in paragraph (3) of this subsection. If the parties cannot agree on the alternative to be elected, they shall be deemed to elect paragraph (2), where such election is permitted under the law of the jurisdiction where the case is filed. (2) Property listed in this paragraph is property that is specified under subsection (d), unless the State law that is applicable to the debtor under paragraph (3)(A) specifically does not so authorize. (3) Property listed in this paragraph is-- (A) subject to subsections (o) and (p), any property that is exempt under Federal law, other than subsection (d) of this section, or State or local law that is applicable on the date of the filing of the petition to the place in which the debtor's domicile has been located for the 730 days immediately preceding the date of the filing of the petition or if the debtor's domicile has not been located in a single State for such 730-day period, the place in which the debtor's domicile was located for 180 days immediately preceding the 730-day period or for a longer portion of such 180-day period than in any other place; (B) any interest in property in which the debtor had, immediately before the commencement of the case, an interest as a tenant by the entirety or joint tenant to the extent that such interest as a tenant by the entirety or joint tenant is exempt from process under applicable nonbankruptcy law; and (C) retirement funds to the extent that those funds are in a fund or account that is exempt from taxation under section 401, 403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue Code of If the effect of the domiciliary requirement under subparagraph (A) is to render the debtor ineligible for any exemption, the debtor may elect to exempt property that is specified under subsection (d). (4) For purposes of paragraph (3)(C) and subsection (d)(12), the following shall apply: (A) If the retirement funds are in a retirement fund that has received a favorable determination under section 7805 of the Internal Revenue Code of 1986, and that determination is in effect as of the date of the filing of the petition in a case under this title, those funds shall be presumed to be exempt from the estate. (B) If the retirement funds are in a retirement fund that has not received a favorable determination under such section 7805, those funds are exempt from the estate if the debtor demonstrates that-- (i) no prior determination to the contrary has been made by a court or the Internal Revenue Service; and

11 The New Massachusetts Exemption Laws Page 11 (ii) (I) the retirement fund is in substantial compliance with the applicable requirements of the Internal Revenue Code of 1986; or (II) the retirement fund fails to be in substantial compliance with the applicable requirements of the Internal Revenue Code of 1986 and the debtor is not materially responsible for that failure. (C) A direct transfer of retirement funds from 1 fund or account that is exempt from taxation under section 401, 403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue Code of 1986, under section 401(a)(31) of the Internal Revenue Code of 1986, or otherwise, shall not cease to qualify for exemption under paragraph (3)(C) or subsection (d)(12) by reason of such direct transfer. (D) (i) Any distribution that qualifies as an eligible rollover distribution within the meaning of section 402(c) of the Internal Revenue Code of 1986 [26 USCS 402(c)] or that is described in clause (ii) shall not cease to qualify for exemption under paragraph (3)(C) or subsection (d)(12) by reason of such distribution. (ii) A distribution described in this clause is an amount that-- (I) has been distributed from a fund or account that is exempt from taxation under section 401, 403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue Code of 1986; and (II) to the extent allowed by law, is deposited in such a fund or account not later than 60 days after the distribution of such amount. (c) Unless the case is dismissed, property exempted under this section is not liable during or after the case for any debt of the debtor that arose, or that is determined under section 502 of this title as if such debt had arisen, before the commencement of the case, except-- (1) a debt of a kind specified in paragraph (1) or (5) of section 523(a) (in which case, notwithstanding any provision of applicable nonbankruptcy law to the contrary, such property shall be liable for a debt of a kind specified in such paragraph); (2) a debt secured by a lien that is-- (A) (i) not avoided under subsection (f) or (g) of this section or under section 544, 545, 547, 548, 549, or 724(a) of this title; and (ii) not void under section 506(d) of this title; or (B) a tax lien, notice of which is properly filed; (3) a debt of a kind specified in section 523(a)(4) or 523(a)(6) of this title owed by an institution-affiliated party of an insured depository institution to a Federal depository institutions regulatory agency acting in its capacity as conservator, receiver, or liquidating agent for such institution; or (4) a debt in connection with fraud in the obtaining or providing of any scholarship, grant, loan, tuition, discount, award, or other financial assistance for purposes of financing an education at an institution of higher education (as that term is defined in section 101 of the Higher Education Act of 1965). (d) The following property may be exempted under subsection (b)(2) of this section: (1) The debtor's aggregate interest, not to exceed $21,625 in value, in real property or personal property that the debtor or a dependent of the debtor uses as a residence, in a cooperative that owns property that the debtor or a dependent of the debtor uses as a residence, or in a burial plot for the debtor or a dependent of the debtor. (2) The debtor's interest, not to exceed $3,450 in value, in one motor vehicle. (3) The debtor's interest, not to exceed $550 in value in any particular item or $11,525 in aggregate value, in household furnishings, household goods, wearing apparel, appliances, books, animals, crops, or musical instruments, that are held primarily for the personal, family, or household use of the debtor or a dependent of the debtor. (4) The debtor's aggregate interest, not to exceed $1,450 in value, in jewelry held primarily for

12 The New Massachusetts Exemption Laws Page 12 the personal, family, or household use of the debtor or a dependent of the debtor. (5) The debtor's aggregate interest in any property, not to exceed in value $1,150 plus up to $10,825 of any unused amount of the exemption provided under paragraph (1) of this subsection. (6) The debtor's aggregate interest, not to exceed $2,175 in value, in any implements, professional books, or tools, of the trade of the debtor or the trade of a dependent of the debtor. (7) Any unmatured life insurance contract owned by the debtor, other than a credit life insurance contract. (8) The debtor's aggregate interest, not to exceed in value $11,525 less any amount of property of the estate transferred in the manner specified in section 542(d) of this title, in any accrued dividend or interest under, or loan value of, any unmatured life insurance contract owned by the debtor under which the insured is the debtor or an individual of whom the debtor is a dependent. (9) Professionally prescribed health aids for the debtor or a dependent of the debtor. (10) The debtor's right to receive-- (A) a social security benefit, unemployment compensation, or a local public assistance benefit; (B) a veterans' benefit; (C) a disability, illness, or unemployment benefit; (D) alimony, support, or separate maintenance, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor; (E) a payment under a stock bonus, pension, profitsharing, annuity, or similar plan or contract on account of illness, disability, death, age, or length of service, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor, unless-- (i) such plan or contract was established by or under the auspices of an insider that employed the debtor at the time the debtor's rights under such plan or contract arose; (ii) such payment is on account of age or length of service; and (iii) such plan or contract does not qualify under section 401(a), 403(a), 403(b), or 408 of the Internal Revenue Code of (11) The debtor's right to receive, or property that is traceable to-- (A) an award under a crime victim's reparation law; (B) a payment on account of the wrongful death of an individual of whom the debtor was a dependent, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor; (C) a payment under a life insurance contract that insured the life of an individual of whom the debtor was a dependent on the date of such individual's death, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor; (D) a payment, not to exceed $21,625, on account of personal bodily injury, not including pain and suffering or compensation for actual pecuniary loss, of the debtor or an individual of whom the debtor is a dependent; or (E) a payment in compensation of loss of future earnings of the debtor or an individual of whom the debtor is or was a dependent, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor. (12) Retirement funds to the extent that those funds are in a fund or account that is exempt from taxation under section 401, 403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue Code of 1986.

13 The New Massachusetts Exemption Laws Page 13 Joseph S.U. Bodoff is a principal in the Boston law firm of Bodoff & Associates, P.C., where his practice concentrates on representing debtors, creditors and creditors committees in chapter 11 reorganizations, out-of-court workouts, litigation related to financially-troubled businesses and litigation of contract disputes. He has participated in the restructuring of businesses in virtually every industry and regularly represents creditors in bankruptcy court and the state and federal courts in the prosecution and defense of various causes of action, including preference and fraudulent transfer claims, equitable subordination, reclamation, breach of fiduciary duty and successor liability. Mr. Bodoff is board-certified in Business Bankruptcy Law by the American Board of Certification. He is active in the American Bankruptcy Institute, where he served on its Board of Directors and its Executive Committee and as co-chair of the ABI Unsecured Trade Creditor Committee. Under his leadership, ABI published a Creditors Committee Manual, over 50,000 copies of which have been distributed. He also led a two-year project studying the Bankruptcy Code s preference provisions. Three of the recommendations resulting from the study were incorporated in the Bankruptcy Abuse Prevention and Consumer Protection Act of Mr. Bodoff is a frequent lecturer and author on bankruptcy and creditors rights topics. Among his publications, he is the author of the chapter on Creditors Committees appearing in the treatise, Bankruptcy Business Acquisitions. If you have any questions about this article, you may contact Mr. Bodoff by phone at or by at jbodoff@bodofflaw.com. For more information about Mr. Bodoff and Bodoff & Associates, P.C., please visit