Certified Question from the United States Bankruptcy Court for the Northern District of Indiana. No. 14-30094 HCD. The Honorable Harry C. Dees, Jr., Judge.
Rebecca H. Fischer, TRUSTEE, Pro se, Laderer & Fischer, P.C.
ATTORNEY FOR DEBTOR: Christopher Schimke, Glaser & Ebbs, Warsaw, IN.
Rush, Chief Justice. Dickson, Rucker, David, and Massa, JJ., concur.
Rush, Chief Justice.
Indiana law exempts life insurance policies from debtors' bankruptcy estates when the named beneficiary is " the spouse,
children, or any relative dependent upon" the debtor. That language undisputedly requires that relatives other than spouses and children must be dependent on the debtor for the exemption to apply, but whether that requirement also applies to spouses and children is less clear. We accepted a certified question asking us to construe whether the " dependent upon" phrase modifies only " any relative," or also " spouse" and " children." The statutory language and structure standing alone are inconclusive, but all of the relevant interpretive canons indicate that we should construe " dependent upon" to modify only " any relative." Accordingly, spouses and children need not be the debtor's dependents for the exemption to apply.
Dennis Howell filed for Chapter 7 bankruptcy protection in the Northern District of Indiana Bankruptcy Court. He listed an Adjustable Complife Insurance Policy with Northwestern Mutual (" the Policy" ) as an asset on his bankruptcy schedules. Debtor claimed the Policy's entire cash surrender value of $14,692.88 as exempt property because his son is the beneficiary, but Bank-ruptcy Trustee Rebecca Fischer objected because Debtor's son is an adult and not " dependent upon" him. Both parties relied on the same phrase in Indiana Code section 27-1-12-14(e) (2012):
[A]ll policies of life insurance upon the life of any person, which name as beneficiary . . . the spouse, children, or any relative dependent upon such person, or any creditor, shall be held . . . for the benefit of such spouse, children, other relative or creditor, free and clear from all claims of the creditors of such insured person or of the person's spouse; and the proceeds or avails of all such life insurance shall be exempt from all liabilities from any debt or debts of such insured person or of the person's spouse.
The parties' arguments reflected opposing views of which beneficiaries the phrase " dependent upon such person" modifies. In Debtor's view, that provision modifies only " any relative" --so that the three categories of beneficiaries are a debtor's " spouse," the debtor's " children," and " any relative dependent upon" the debtor. By contrast, the Trustee says " dependent" modifies all three categories, so that any beneficiary--" spouses," " children," and " any relative" alike--must be the ...