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In re Yuhas

January 22, 1997

IN RE: RONALD J. YUHAS, DEBTOR THOMAS J. ORR, APPELLANT

v.

RONALD J. YUHAS



ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY (Civil Action No. 95-5551)

Before: ALITO and McKEE, Circuit Judges and GREEN, District Judge *fn*

ALITO, Circuit Judge

Argued: October 1, 1996

Opinion Filed: January 22, 1997

OPINION OF THE COURT

The issue in this appeal is whether a New Jersey statute, N.J.S.A. 25:2-1(b), that protects a qualified individual retirement account (IRA) from claims of creditors constitutes a "restriction on the transfer of a beneficial interest of the debtor in a trust" within the meaning of 11 U.S.C. Section(s) 541(c)(2) and thus results in the exclusion of the IRA from a bankruptcy estate. We hold that it does, and we therefore affirm the decision of the district court.

I.

Debtor Ronald J. Yuhas (the "debtor") filed a Chapter 7 bankruptcy petition, and a trustee was appointed. At the time of his petition, the debtor held an IRA account containing approximately $143,000. He states that these funds represented his interest in a terminated pension plan that he had "rolled over" into his IRA two years earlier.

The debtor listed the IRA as an asset but claimed that it was not part of the bankruptcy estate because of N.J.S.A. Section(s) 25:2-1(b). He then filed a motion seeking a declaration to this effect, and the trustee filed a cross-motion seeking to have the IRA declared an asset of the estate. The bankruptcy court granted the debtor's motion and denied the trustee's motion, and the district court affirmed. The trustee then took this appeal.

II.

Section 541(c)(1) of the Bankruptcy Code, 11 U.S.C. 541(c)(1), broadly states that a bankruptcy estate includes "all legal or equitable interests of the debtor in property" as of the commencement of the bankruptcy estate "[e]xcept as provided in subsections (b) and (c)(2) of this section." Subsection (c)(2) provides:

A restriction on the transfer of a beneficial interest of the debtor in a trust that is enforceable under applicable non-bankruptcy law is enforceable in a case under this title. 11 U.S.C. Section(s) 541(c)(2).

The question before us is whether N.J.S.A. 25:2-1(b) constitutes a "restriction on the transfer of a beneficial interest of the debtor in a ...


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