In re: Bronk, No. 13-1516 (7th Cir. 2015)
Annotate this CaseBronk incurred debts providing his wife’s medical care before her 2007 death. He suffered a stroke in 2009. With medical debts exceeding $345,000, his assets included his home, without a mortgage, and a $42,000 certificate of deposit. On advice of counsel, Bronk borrowed $95,000, mortgaging his home, to establish college savings accounts for his grandchildren under IRC 529. Account owners control the funds in such accounts, may change beneficiaries, and may, at any time, request a 100% distribution. Bronk converted the $42,000 c.d. into an annuity, to begin making payments in 2035, including a death benefit. Bronk filed for Chapter 7 bankruptcy. The trustee objected to the college-fund and annuity transactions, citing 11 U.S.C. 727(a)(2)(A).The bankruptcy judge found no evidence that Bronk had acted with intent to hinder, delay, or defraud creditors, but interpreted section 815.18(3)(p) (exemption for college accounts) as applying only to the beneficiary’s interest, not the owner’s interest, and disallowed exemptions. The judge held that the annuity was a fully exempt retirement benefit under section 815.18(3)(j). The Seventh Circuit held that the college accounts are exempt and that the annuity satisfies the basic definition of an exempt “retirement benefit.” To qualify as a fully exempt retirement benefit, however, the plan must be either employer sponsored or comply with IRC 815.18(3)(j)2; the trustee waived that issue.
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.