1By: Scott B. Riddle, Esq.

In re Hainlen, Case No. 06-10678, 2007 Bankr. LEXIS 1041 (Bankr. S.D. Ga. March 26, 2006)(Barrett).

Debtor’s father was a teacher, and had a retirement annuity with the Teachers Retirement System of Georgia.  He designated his daughter, the debtor, as a beneficiary of 25% of the proceeds.  Upon his death, the debtor had the option of choosing a lump sum payout or monthly payments, and she chose monthly payments.

Debtor subsequently filed a bankruptcy petition and claimed that the retirement fund either was not property of the estate or was fully exempt.  The Court determined that Section 541(c)(2) excluded the fund from estate property as the funds, under state law, were part of a "plan or trust."  Further, the retirement fund includes a "spendthrift," or anti-alienation, provision.  The analysis does not change because the retirement funds arose from debtor’s father’s retirement plan, rather than from the debtor.