Posts Tagged ‘exemptions’

Is that an Heirloom in My Room?

What is an heirloom?  Is a gift from Mom an heirloom?  What about a gift from Grandma?  What if the gift was simply an ordinary aluminum boat you could pickup at Cabela’s?

Well, there are two criteria that must be met for an asset to be deemed an heirloom:

1. the asset must be subject to multi-generational transfers, and

2. must possess unique characteristics that differentiate it from other similar items, such as antiquity, novelty, or history.

The exemption statute at issue here, Idaho Code § 11‐605, provides:

(1) An individual is entitled to exemption of the following property to the extent of a value not exceeding seven hundred fifty dollars ($750) on any one (1) item of property and not to exceed a total value of seven thousand five hundred dollars ($7,500) for all items exempted under this subsection:

* * * *
(c) Family portraits and heirlooms of particular sentimental value to the individual.

“An heirloom is “an item of property which has passed through at least one generation before it became property of the debtor.” In re Hearn, 97.1 IBCR at 22.  Stated another way, in order to achieve heirloom status, more than one generational transfer of the item in question is required.” In re Merrill, ID BK Case No. 12-40663-JDP, (Sept. 24, 2012).

“If this initial burden is met, the debtor must then show that the property has some characteristics of uniqueness that differentiate it from other similar items, such as antiquity, novelty, or history.” Id.

In the Merrill case, which only focuses on the first element, the Debtors’ son had purchased a boat from an aunt before he died intestate.  The Debtors took possession of the boat with the intention to pass it to their grandson when he reaches the age of majority.  Thus the boat really only passed from the Debtors’ son to the Debtors (the Court apparently did not consider the purchase of the boat a “generational transfer”).  So while this transfer between the Debtors’ and their son involves multiple generations (two), the asset must pass through at least one generation, not simply passed to one generation.  Thus at least 3 generations must be involved. 

“Even if this transfer from a descendant to an ancestor could be considered a passing of property from one generation to another, in the heirloom analysis, it represents but a single generational transfer, not the multi‐generational passing required by the case law in this District.” Id.

Thus a gift from Mom will not suffice as an heirloom.  I do not believe a gift from Grandma would suffice either – though I’m sure someone will try to argue that skipping a generation suffices as passing through it.

The two cases cited by Merrill appear to address only the first element, and not what constitutes sufficient “history” for an asset to have unique characteristics.  And I have not personally researched the issue, but I would surmise that if an asset satisfies the first element of an heirloom, then it likely has sufficient intrinsic history and sentimental value to meet the second element.  But again, that depends on the asset and the facts of each generational transfer – as I don’t think the issue is so clear with an aluminum boat Grandpa bought at Cabela’s 10 years ago and is now in the Debtors’ possession.

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