HB396 By Representative Hill (J) RFD Judiciary Rd 1 02-APR-15

SYNOPSIS: Under existing law, surviving spouses of decedents domiciled in the state are entitled to a six thousand dollars ($6,000) homestead allowance and personal property valued at three thousand five hundred dollars ($3,500) in excess of any security interests in furniture, automobiles, furnishings, appliances, and personal effects.

Existing law also provides that if there is no surviving spouse, each minor child and dependent child of the decedent is entitled to an equal share of that allowance.

Existing law also provides that an individual Alabama debtor is entitled to a homestead exemption of $5,000 and a personal property exemption of $3,000, a married couple is entitled to the homestead exemption and the personal property exemption.

Existing law also prohibits an Alabama debtor filing bankruptcy from protecting property in accordance with federal exemption limits.

This bill would have the effect of increasing the homestead exemption to $30,000 and the personal property exemption to $10,000 for surviving spouses and an individual debtor.

This bill would also allow debtors filing bankruptcy the option of exempting homestead and personal property in accordance with federal bankruptcy law.

This bill would restrict the amount of income that may be levied to a portion of disposable income of an individual.

A BILL TO BE ENTITLED AN ACT

To amend Sections 6-10-2, 6-10-6, 6-10-11, 43-8-110, 43-8-111, 43-8-113, and 43-8-115, Code of Alabama 1975, to increase permissible exemptions available to a surviving spouse to thirty thousand dollars ($30,000) for homestead and ten thousand dollars ($10,000) for personal property; to increase an Alabama debtor's individual homestead exemption to thirty thousand dollars ($30,000) and an individual's personal property exemption to ten thousand dollars ($10,000), to provide debtors filing bankruptcy options of additional exemptions allowable under federal bankruptcy law.

BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:Section 1. Sections 6-10-2, 6-10-6, 6-10-11, 43-8-110, 43-8-111, 43-8-113, and 43-8-115, Code of Alabama 1975, are amended to read as follows:

§6-10-2.

"The homestead of every resident of this state, with the improvements and appurtenances, not exceeding in value $5,000 thirty thousand dollars ($30,000) and in area 160 acres, shall be, to the extent of any interest he or she may have therein, whether a fee or less estate or whether held in common or in severalty, exempt from levy and sale under execution or other process for the collection of debts during his or her life and occupancy and, if he or she leaves surviving him or her a spouse and a minor child, or children, or either, during the life of the surviving spouse and minority of the child, or children, but the area of the homestead shall not be enlarged by reason of any encumbrance thereon or of the character of the estate or interest owned therein by him or her. When a husband and wife jointly own a homestead each is entitled to claim separately the exemption provided herein, to the same extent and value as an unmarried individual. For purposes of this section and Sections 6-10-38 and 6-10-40, a mobile home or similar dwelling if the principal place of residence of the individual claiming the exemption shall be deemed to be a homestead.

§6-10-6.

"The personal property of such resident, except for wages, salaries, or other compensation, to the extent of the resident's interest therein, to the amount of $3,000 ten thousand dollars $(10,000) in value, to be selected by him or her, and, in addition thereto, all necessary and proper wearing apparel for himself or herself and family, all family portraits or pictures and all books used in the family shall also be exempt from levy and sale under execution or other process for the collection of debts. No wages, salaries, or other compensation shall be exempt except as provided in Section 5-19-15 or Section 6-10-7.

§6-10-11.

"In cases instituted under the provisions of Title 11 of the United States Code entitled "Bankruptcy," there shall be exempt from the property of the estate of an individual debtor only that property and income which is exempt under the laws of the State of Alabama and under federal laws other than Subsection (d) of Section 522 of said Title 11 of the United States Code.

§43-8-110.

"(a) A surviving spouse of a decedent who was domiciled in this state is entitled to a homestead allowance of $6,000.00 thirty thousand dollars ($30,000). If there is no surviving spouse, each minor child and each dependent child of the decedent is entitled to a homestead allowance amounting to $6,000.00 thirty thousand dollars ($30,000) divided by the number of minor and dependent children of the decedent. The homestead allowance is exempt from and has priority over all claims against the estate. Homestead allowance is in addition to any share passing to the surviving spouse or minor or dependent child by the will of the decedent unless otherwise provided in the will, by intestate succession or by way of elective share.

"(b) The value of any constitutional right of homestead in the family home received by a surviving spouse or child shall be charged against that spouse or child's homestead allowance to the extent that the family home is part of the decedent's estate or would have been but for the homestead provision of the Constitution.

§43-8-111.

"If the decedent was domiciled in this state at the time of death the surviving spouse is entitled to receive, in addition to the homestead allowance, property of a value not exceeding $3,500.00 ten thousand dollars ($10,000) in excess of any security interests therein in household furniture, automobiles, furnishings, appliances and personal effects. If there is no surviving spouse, children of the decedent are entitled jointly to the same value. If encumbered chattels are selected and if the value in excess of security interests, plus that of other exempt property, is less than $3,500.00 ten thousand dollars ($10,000), or if there is not $3,500.00 ten thousand dollars ($10,000) worth of exempt property in the estate, the spouse or children are entitled to other assets of the estate, if any, to the extent necessary to make up the $3,500.00 ten thousand dollars ($10,000) value. Rights to exempt property and assets needed to make up a deficiency of exempt property have priority over all claims against the estate, except that the right to any assets to make up a deficiency of exempt property shall abate as necessary to permit prior payment of homestead allowance and family allowance. These rights are in addition to any benefit or share passing to the surviving spouse or children by the will of the decedent unless otherwise provided, by intestate succession, or by way of elective share.

§43-8-113.

"If the estate is otherwise sufficient, property specifically devised is not used to satisfy rights to homestead and exempt property. Subject to this restriction, the surviving spouse, the guardians of the minor children, or children who are adults may select property of the estate as homestead allowance and exempt property. The personal representative may make these selections if the surviving spouse, the children or the guardians of the minor children are unable or fail to do so within a reasonable time or if there are no guardians of the minor children. The personal representative may execute an instrument or deed of distribution to establish the ownership of property taken as homestead allowance or exempt property. He may determine the family allowance in a lump sum not exceeding $6,000.00 thirty thousand ($30,000) or in periodic installments not exceeding $500.00 per month for one year, and may disburse funds of the estate in payment of the family allowance and any part of the homestead allowance payable in cash. The personal representative or any interested person aggrieved by any selection, determination, payment, proposed payment, or failure to act under this section may petition the court for appropriate relief, which relief may provide a family allowance larger or smaller than that which the personal representative determined or could have determined.

§43-8-115.

"(a) Whenever an employee of another shall die intestate and there shall be due him or her any sum as wages or salary the debtor may discharge himself from liability therefor by paying such amount to the surviving spouse of the deceased employee or, if there is no surviving spouse to the person having the legal custody and control of his or her minor child or children, or either as the case may be, who may commence an action for and recover the same as part of the property or allowance exempted to them.

"(b) Any sums paid in accordance with the provisions of subsection (a) of this section shall be considered as part of the exempt property, as defined in section 43-8-111; and, if the sums exceed $3,500.00 ten thousand dollars ($10,000) the excess shall be considered part of the family allowance, as defined in section 43-8-112."

Section 2. This act shall become effective immediately following its passage and approval by the Governor, or its otherwise becoming law.

Homestead Exemption

Taxation

Property, Real and Personal

Ad Valorem Tax

Debts

Bankruptcy

Code Amended