Mr. and Mrs. Foley each had several life insurance policies which named as the beneficiary a testamentary trust created by virtually identical wills. These directed the estate trustee to use any income and principal from the trust “for the health, maintenance and support” of the surviving spouse or subsequently their son. A later provision, however, authorized the trustee to “compromise claims”. Based on this provision, the bankruptcy trustee objected to the Foley’s claimed exemption.
The bankruptcy court started from the position that exemptions are to be liberally construed in favor of the debtor, see Elmwood v. Elmwood, 295 N.C. 168, 185, 244 S.E.2d 668, 678 (1978) (citing Goodwin v.… Read More