Judges: J.D. MacFARLANE, Attorney General
Filed Date: 3/24/1975
Status: Precedential
Modified Date: 7/5/2016
Henry A. Foley, Ph.D. Executive Director Department of Social Services 1575 Sherman Street Denver, Colorado 80203
Dear Mr. Foley:
This constitutes my informal opinion regarding the above captioned case.
In Kidd v. Colorado Department of Social Services, Denver Dist. Ct., Civil Action No. C-47300, plaintiff seeks judicial review of the decision of the Colorado Department of Social Services hearing officer which upheld the decision of the county department of social services to terminate assistance because she owned life insurance with a cash surrender value of nearly $2,000. The Agency Decision was rendered by application of the Colorado Department of Social Services rules which provide as follows:
4112.1 ALL NONEXEMPT PROPERTY MUST BE CONSIDERED.
Unless exempt, all property is considered as nonexempt and is subject to the $1,000 limitation in all cases. There is no permissible variation from the $1,000 property limitation. A recipient having exactly $1,000 is eligible for assistance. A recipient having $1,000.01 is ineligible.
. . . .
4113.5 INSURANCE CHARGED AS NON-EXEMPT PROPERTY.
Insurance policies owned by the recipient are chargeable as non-exempt property in the amount of their cash surrender value. For burial policies see 4111.3 and 4111.31.
By application of the above-quoted rules the agency hearing officer reached a decision that the ownership of life insurance policies with a cash surrender value in excess of the $1,000 maximum rendered the recipient ineligible for assistance.
The Colorado Constitution, Article
No person otherwise qualified shall be denied public assistance by reason of the fact that he is the owner of personal property which is exempt by the laws of Colorado from execution or attachment.
The term "public assistance" is defined to include programs for Old Age Pension, Aid to Families with Dependent Children, Aid to the Needy Disabled, Aid to the Blind, Child Welfare Services, expenses of treatment to prevent blindness or restore eyesight, and funeral and burial expenses. C.R.S.
The statute governing attachment and execution, C.R.S.
(1) The following property is exempt from levy and sale under writ of attachment or writ of execution:
. . . .
(2) The avails of policies or certificates of life insurance to the extent of five thousand dollars;
QUESTION PRESENTED AND CONCLUSION
Whether the cash surrender value of a life insurance policy constitutes the avails of such policy within the meaning of C.R.S.
My conclusion is "yes."
ANALYSIS
The precise question considered herein has been presented to federal courts which are required to apply state exemption laws in bankruptcy proceedings.Holden v. Stratton,
it would seem that the legislative policy is to provide citizens of West Virginia an avenue for protecting and providing for the welfare of those who are their special concern, without risk that their purpose may be frustrated by seizure at the instance of future creditors. It cannot successfully be contended that, absent constitutional prohibition, this is not a proper legislative purpose. It is not the province of the courts to criticize the propriety of the legislature's actions or to limit any clearly expressed purpose by strained construction. To limit the meaning of the words ``proceeds and avails,' to that contended for by the Trustee, would seriously hamper the accomplishment of the expressed legislative purpose. Seizure and appropriation of the values of life insurance built up during the lifetime of the insured by his creditors would frustrate the purpose just as much as would the seizure of the death benefits by creditors of his estate after his death. Id. at 612.
Accordingly, the court held that the cash surrender value of a life insurance policy was exempt from the claims of the creditors.Accord,Pearl v. Goldberg,
The sole Colorado case concerning the exemption statute under consideration herein is State v. Estate of Butler,
SUMMARY
In summary, the great weight of authority holds that an exemption for the proceeds or avails of a life insurance policy extends to the cash surrender value of such insurance policy. There exists a paucity of Colorado or other authority to the contrary. Accordingly, one must conclude that the rule of the Colorado Department of Social Services which requires that the cash surrender value of life insurance policies be considered non-exempt property for the purpose of determining eligibility for welfare benefits is contrary to the Colorado Constitution, Article
Very truly yours,C.R.S. 1973,J.D. MacFARLANE Attorney General
SINCE ITS ISSUANCE THIS OPINION LETTER WAS ADOPTED AS A FORMAL OPINION OF THE ATTORNEY GENERAL BY ATTORNEY GENERAL J.D. MacFARLANE
AGED, AID TO GARNISHMENT
SOCIAL SERVICES, DEPT. OF Aging
The cash surrender value of a life insurance policy constitutes "the avails of such policy" and must be disregarded to the extent of $5,000 in determining eligibility for welfare benefits.
In Re White , 185 F. Supp. 609 ( 1960 )
Wilson v. Mut. Benefit Life Ins. Co. of Newark , 182 S.C. 131 ( 1936 )
In Re Elliott , 74 Wash. 2d 600 ( 1968 )
Jason E. Pearl, Trustee in Bankruptcy of Herman Goldberg, A.... , 300 F.2d 610 ( 1962 )
Westinghouse Credit Corporation v. Crotts , 250 Iowa 1273 ( 1959 )
Home Security Life Insurance Company v. McDonald , 277 N.C. 275 ( 1970 )
Finance Acceptance Company v. Breaux , 160 Colo. 510 ( 1966 )
Holden v. Stratton , 25 S. Ct. 656 ( 1905 )
Succession of Videau , 197 So. 2d 655 ( 1967 )
Fox v. Swartz , 235 Minn. 337 ( 1952 )
Meyer v. United States , 84 S. Ct. 318 ( 1963 )