protection status of an individual retirement account when the owner of that account has engaged in a disqualifying transaction which could or will result in the loss of tax exempt status for that account or plan governing that account eventually by the i r s or tax court and so the issue of the specific issue is this gap period between when the disqualifying of that has occurred in order for the denial of the exemption to be up and held why shouldn't we determine this is not final and when it is final you can come back well your honor the trustee says he's got a second order approving administrative expenses he's got to prepare a final accounting he's got to prepare a distribution report to be reviewed by the trustee in the department of justice pending approval of all of that a notice of the final report must be provided to the debtor it must be provided to all interested parties at which time they will have an opportunity to object in the bankruptcy court then assuming there are no objections and assuming the bankruptcy court approved it would enter an order approving the accounting destroying the trustee cancelling the bond and closing the estate but until all of that happens isn't this at least fairly arguably premature not final and we ought not to step down the road of answering this  question thank you our so the first issue of context is yes the trustee has to perform those duties but that's really all that's left are there is a two day trial on this issue court entered final order the trustee has the money from the ira and if he does the final report he's going to distribute it at which point of the issues will be moot because the money will be gone is there any other assets in the state other than this money there is a judgment that he received at the same trial against a third party and he's currently in the process of bringing a state court lawsuit against that third party to try to collect some extra money for the nice now the corpus of this money is the only asset in the estate there may be some other minor assets from some vehicles  honor but this is the major aspect i was thinking about the same question and it's kind of difficult here because he can't come up with a distribution final plying an untimely knows where this money is part of it and  not you can't then close out the bankruptcy without saying everybody i you get this you get this this is the largest asset i don't know how much money how much money it was about three hundred fifty thousand dollars and i am right and i don't know what the value of the homestead that he's chasing against the debtors wife and the third party may be somewhat close to three hundred fifty thousand but but i agree that there's no way to close it out until you know whether you have this asset i'm not saying we should take jurisdiction because of that but that goes to whether or not it's final and there's as to this asset to go ahead and have a ruling whether  exemption was determined not be final but the case discusses a three part test for an exception where exception where it is final and i think it meets all parts of the report test as well the first is this order independent from other claims i think it's clear that this order on this exemption is independent from any other claim clear the record is complete in this case i'm not sure i understand the question or the record is very messy in this case because i that's why i ask you what happen is the trial asked the question because it may or may not be distinguishable from which is depending on whether or not the record is complete i understand your honor i think that the record not discuss any issues related to whether or not mr garion needs the money as discussed in with is that i think as it's in an ira he doesn't need it but i think under the second test of whether prompt review is necessary i think it is in the sense that if review is not given the money will be spent and then this whole issue will be moot so i we if we wait to appeal after the money has been distributed by the trustee to all the criminal money we're talking about it was three hundred fifty thousand and the irony is the value of the iraq consisted of assets including some real estate actually some cars was kind of bizarre ira but that was the original value are there other separate issues still pending in the bankruptcy court no issues that i know of one are they i've no issues i know of pending in the bankruptcy court other than the procedural ministerial matters that you're mentioned your honor the only ongoing issue i know of is the state court lawsuit against third party  spouse and so your honor we would leave believe this is final and there's no other time that would like seems to me your argument has to be it's finally not even though it isn't really final well that's exactly the third part of with the third part of the test is in you look at a practical not a technical analysis in bankruptcy is a strange animal because you have this ongoing process that lots of little disputes are getting ruled on and then you get to the end and a lot of things are moot if you don't get review before the end and so underway as i think you can take a practical approach and this case practically i think it has a really at the heart of your argument is the proposition that if we don't hear it now and you prevail it would be very difficult to repair your interests at the properties are sold dissipated or they're all gone with the wind yeah exactly right i think the property the money is going to get distributed out to creditors not to be able to go back well let's go to the merits thank you are so we have this gap period a disqualifying event occurs inside of a plan and then when the i r s or tax court gets around to ruling on that so you have this time period so actually i'm going to interrupt you because i'm not i'm a entirely sure that's true under the structure  the statute do you have a copy of the two two two two one statute in front of you i do your are at least part of it so if you look at subsection if you look at two a one it discusses  plans that have been pre approved by the i r s right yes or no and then you look at subsection two and that discusses plans that have been determined by the i r s to be exempt from taxation and then three appears to be plans that were neither pre approved nor subsequently determined by the arris did it does your client have any sort of determination letter from the i r s that his plan  exempt from taxation we do not have a determination letter but what we have is the expert report an expert testimony in the record of mr van hider who is the trustees expert police expert stating that the  plan was proper when originally incorporated that's the evidence that that's a different thing there than a determination by the i r s that that was proper correct yes honor and so if you look at the plan documents that are in the record they are essentially based on forms that mr van hyde has testified were proper forms because of the possibility it could be interpreted under both subsection one or subsection two but my opinion based on mr van hyde as report is that it's a pretty prove plan for  and so our position is that the statute was amended in two thousand and five to protect the ira during that gap period and what what the key thing to look at its to distinguish it from the bankruptcy statute the bankruptcy statute there's under five point two b three c also provides for protection from iras but that statute makes tax exempt status of the plan immediately equivalent to creditor exempt status meaning as soon as it's qualifying transaction occurs the the creditor exemption status is immediately lost and florida's two two to twenty one used to be interpreted that way prior to two thousand and five but in two thousand and five you have these amendments and the amendment state that now these iras or these plans that include these accounts are  determination is be made before a disqualifying of that can take away creditor exempt status but it isn't clear what the proceeding is or who's supposed to be making these decisions at the proceeding and so i think the only way to get a clear answer on that question is what's the proceeding who makes the decision is to look at the legislative history which thankfully is very clear which side in the briefs which states that the purpose of the statute is to increase creditor protection and the legislative history mentions that there was litigation by creditors trying to levy on iras before the i r s of the government had gotten to the ira or made a determination so they're trying to force the trial court to make the tax exempt status determination and the let's say history clearly states that the i r s and tax courts will make the determination regarding the tax exempt status of a plan under this bill and so it's taking that power away from the trust wanted to tell you sort of gone over your time you still have time left if you want to but you will be eating into it and mirbeau your honor yes or understood thank your honor  address the jurisdictional issue first i'll do the same if it if that's what the court desires the first thing i'd like to note is that between the time that the parties conducted their jurisdictional briefing and today there has been a change in circumstances in the bankruptcy and i think it's important to point that out one thing that the trustee noted it goes from page four to page five of our jurisdictional brief is that at the time that we were conducting the jurisdictional brief there was additional occasion pending there was an appeal that had been filed on a another issue a claim of exemption in or a fraudulent transfer with respect to money transferred to the debtors non filing spouse  that was on appeal to the middle district it went it went back to the bankruptcy court on remand since that time there has been a trial on remand and it has been resolved so the appeal that we reference i pending that has turned into what counsel mentioned which is the state court litigation in which the bankruptcy trustee mr weber is attempting to turn the judgment for fraudulent transfer that he obtained against the non filing spouse into actual assets of the estate so it's it's an equitable lien proceeding with respect to the election yes your honor this that's correct i mean she's involved in the so the principal amount of the judgment findings that the bankruptcy court made with respect to the fraudulent transfer we believe that there is a very high likelihood of success on the merits of our equitable lien claim specifically because the bankruptcy judge traced the specific funds that were transferred to the non filing spouse into the purchase of the homestead and so for that reason we feel relatively confident in success on the merits of the equitable lien claim and ultimately a collection of at least some portion of that judgment do you agree with bankruptcy again after all of the assets of an marshall which includes this the equitable lien litigation against the non filing spouse once that occurs the next step in the bankruptcy is to for the trustee to  propose a plan of distribution it will either be objected to or not once the bankruptcy court decides the objections and approves a plan of distribution then the estates assets are distributed out so if you use that as the starting exercise jurisdiction kind of the debatable area it's lucy nothin the bankruptcy field so that we probably could keep jurisdiction and go to the merits your honor you can make a pretty good argument the other way that being the case and given what you've said why doesn't that answer why shouldn't we just take it keep it and decided on the merits your honor the trustee did not object to the jurisdiction of this court on appeal for reason the trustee would frankly like to have this adjudicated on the merits the longer this remains open of the answer is you're only responded because we asked you to yes your honor ok with respect to the the merits of the underlying issue for the self directed ira just the plan itself satisfy the internal revenue code requirements and has the plan subsequently been determined to be non compliant by the i tax court but that's not the issue if we look at the statutory tax to florida statute to twenty two point two one both subsections one and two there's a two part test which the district court correctly pointed out the question is isn't just does the plan satisfy the internal revenue code but also has the debtor quote maintained this particular asset in accordance with a plan satisfies the internal revenue code now hear hear the undisputed facts from the record the plan itself is in the record on appeal at twelve dash ten and the ira agreement itself it contains its general terms and conditions it contains a section that's entitled quote prohibited transactions that section of the ira agreement notifies the ira participants that a quote prohibited transaction is a transit transaction between  plan and a disqualified person that is prohibited by law it goes on to give examples to the participants of what prohibited transactions are and they include quote a transfer of planned income or assets to or the use of them by or for the benefit of a disqualified person it then goes on to identify what i disqualified person is as quote the owner of the plan and quote any member of your family i e your spouse now the undisputed facts in the record are that the appellant engaged in prohibited transactions because he used ira assets to buy two vehicles that were titled in his name and his wife's name for him to transaction because he used planned income and assets for the benefit of himself in a spouse he also used real property that was owned by the ira in the form of a kind of mini i'm located in puerto rico for personal purposes now the testimony just like  are i'm not sure automatically it makes any difference because they have them and still requires it be maintained in accordance with the plan you're just saying the plan says you can't have prohibited transactions they had trying so your honor just got to the heart of what my response would have been i'm not it's a distinction that i think is without a difference because the applicable language is identical ted also has lost here has this just been a preapproved tion are is this ape and that has been where he discusses this is being an approved plan but i would suggest to the court that the record does not contain any evidence as to whether this is either a pre approved plan  that has been determined to be exempt from taxation i don't believe that that the issue of does someone or sub to apply was determined by the bankruptcy court and so i don't believe that's in the record also that even though it appears that that's not important  as important for us to know that because whatever interpretation we have of these statutes is going to apply in other cases and i would suggest to the court that the record before your honor's simply doesn't answer that that question and so sitting here today i don't want to mislead the court as to whether this is either pre if so would be fair to say we ought to wait and section subsection two that's the relevant one here subsection two is what the parties argued in there in their  honor with respect to the interpretation of of that subsection and that language specifically the language maintained in accordance with that's the language that is directly applicable  this case and that's the language that the district court correctly relied upon when it affirmed the bankruptcy courts judgment now maintained your if your honour's look at the briefing submitted by the parties you'll notice that while the statute says maintained and while the district court notes that language maintained the at billy's briefing often substitute the word established for maintained aptly does that because using the word establish with its unique meaning is necessary for this court to accept the applebee's logic the apple e wants this court to adopt a statutory framework that says that so long as an individual establish is a self directed ira under a form that has been approved or pre approved are determined to be appropriate by the i r s then we get to keep the assets in this i as creditor exempt so long as there hasn't been a final not appealable determination by the i r s or a tax court that the plan is no longer acceptable that doesn't make any sense because one it ignores the obligation of the individual to maintain his ira in accordance with this plan that's been pre approved it also establishes a statutory framework that encourages fraud anyone could go out and place all of their assets in a self directed ira that simply uses a form that has been pre approved by the i r s ok as soon as the i you know catches on to the to the gig and notes that the individual has been misusing the assets engaging in prohibited transactions that the individual can continue engaging in prohibited transactions with out any consequence so long as the moment before a final not appealable determination of been made by the i r s or tax court he files bankruptcy that's the effect of the appellant's argument and that certainly isn't what the florida state of florida legislature could have intended and in fact that's not what the plain language of the statute says counsel notes some legislative history from one of the chambers florida legislature but frankly it's unnecessary to look at the legislative history because the language of the saturate itself is clear the debtor had to maintain the ira in accordance with the plan law definition or dictionary defines maintain as a verb meaning quote to continue something by very definition it's not a static term it it requires an active and continuous compliance with a plan on the other hand if you if the court were to allow the appellant to engage in a sleight of hand where we substitute the word establish for maintain well then his argument makes sense because established as a is defined as meaning to settle make or fix permanently to an act permanently as a static term so as long as a debtor establishes his self directed ira under an approved form then he gets to engage in fraud  misconduct engage in prohibited transactions and as long as he files bankruptcy before he's caught he gets to maintain those assets as creditor exempt and that's not the intent of the statute an issue that wasn't argued by the paladin at least not in any length in his his argument but it was it was raised in his briefings all address it here the bankruptcy court itself certainly had jurisdiction to decide this issue the appellant's briefing suggests that only the i r s or a tax court this could decide this that is inconsistent with i think the well established law twenty eight u s c one fifty seven b to be defines what the core proceedings of a bankruptcy court are those core proceedings specifically include the quote allowance or disallowance of exemptions from property of the estate and the bankruptcy courts have a long history of deciding both federal exemptions and state court exemptions bankruptcy courts routinely decide whether for instance in florida the homestead exemption will apply to debtors property and so i don't think there's any support in the case law with  the argument that the bankruptcy court didn't have any jurisdiction to decide this issue i would last note that the appellant hasn't cited to a single case in which any court has found that a debtor can engage in prohibited transactions and still maintain his assets as a creditor exempt on the other hand the trustee has cited the case law admitted lee applying the federal statute which is very close to the state statute willis case where prohibited transactions the mere existence of prohibited transactions was enough  as i'd like to talk about the language to maintain language that i think is at issue here the first and like to point out is if you look at the whole context of two twenty two twenty one you see it never mentions individual retirement accounts it are exempt from creditors and so the usage of that phrase maintained in accordance with section four away is first being used to denote what it is that's exempt it's a plan that maintained under section four away which is an ira so it's basically another way of saying and i write in addition your honor if the test is to look at the word maintain and say that's a question of whether there's been a disqualifying transaction then it reads out the second part of the statute that was amended in two thousand and five and courts have a requirement to try to make all parts of the statute work and so if you turn this into a initial test where there's been a disqualifying transaction it's no longer been maintained then what's the point of the later final  ira account and i proceed over a period of time to withdraw eighty thousand dollars i take out ten grand a month by your take i would have maintained it in the cordons with the plan of the governing instrument honor in a sense because in this sense because the argument is that the disqualifying transaction does not mean that the play and the account that's in the plan is not being it was not maintained under section four a way that the account is still in an ira it hasn't been determined i even if i leave only one dollar in that account and i dissipated ninety nine thousand dollars i'm still maintaining it in accordance with the plane the one dollar that's left yes your honor so here's here's one reason they are going to is not adding up to me the action of the person of your client is maintained he supposed to maintain this account in accordance with the master plan and your argument is unless it's been subsequently determined that there's been a problem but the subsequent determination according the text of the statute is about the plan or the governing instrument that the planner governing instrument is not exempt from taxation not that the executor of the plant not that the owner of that ira has acted in a way that was inconsistent in the plans documents why isn't  isn't this language related to that the documents of the plan rather than the actions of the person who maintains the ira yes your honor and so it took me a while to figure that out but it comes down to the irene nomenclature so what happens is you have an account this individual retirement account and it exists it's not tax exempt it's the plan that's tax exempt and so the ira account exists as a component of the plan and when the tax exemption is lost it's not the account that this is a tax exemption of the way this is the nomenclature of the issue it's the plan that loses the retirement plan your retirement plan now loses its tax exempt status as to its remaining right at the matches in section sections one and two sets out different ways that this these plans can be either pre approved or determined it seems to me that it's it makes more sense for all this language surely to the plans and the maintenance requirement is what's related to the person who has the plan if that were true i would first response would be i don't understand why they would have changed the statute all what it would have difference it would have made of made the change but second of all your honor if it would make the statue essentially a non sequitur because it's saying if you have a plan that's been determined by the i r s to be approved it's exempt unless the i r s determines it's not been approved and i think what they just carries you know or so i think in order to make the statute make sense you have to read it in the context of the legislative history which is saying that we don't want creditors to be able to have tax exemption issues determined by a trial court while trying to levy on an ira account inside a plant when they are trying to claim that the plant has lost its sexism stuff thanks very much thank you both and we'll move on to the