Opinion ID: 3004584
Heading Depth: 2
Heading Rank: 1

Heading: The College Savings Accounts

Text: Wisconsin’s exemption statute allows debtors to exempt “[a]n interest in a college savings account under s. 16.641” from execution by creditors. § 815.18(3)(p). The term “interest” is not 10 Nos. 13-1123 & 13-1516 specifically defined in the statute or by regulation,3 but an “interest” is generally defined as “[a] legal share in something; all or part of a legal or equitable claim to or a right in property.” BLACK’S LAW DICTIONARY 934 (10th ed. 2014). Bronk clearly has a legal interest in each of the Edvest college savings accounts. He owned the accounts and could at any time select and change beneficiaries, transfer funds between accounts, receive distributions from the accounts, and (subject to certain limitations) remove funds from the accounts. See § 16.641(3)(a)–(b). Indeed, if Bronk lacked a legal or equitable interest in the accounts, they would not have been part of the bankruptcy estate in the first place. See 11 U.S.C. § 541(a)(1) (including in the property of the estate “all legal or equitable interests of the debtor in property”). The trustee insists nonetheless that the statute is ambiguous and must be understood as simply incorporating by reference the exemption contained in section 16.641, the enabling statute for Wisconsin’s Edvest program. Section 16.641 contains an exemption to protect the beneficiary’s interests in a college savings account: “A beneficiary’s right to qualified withdrawals under this section is not subject to garnishment, attachment, execution, or other process of law.” § 16.641(7). Both lower courts agreed with the trustee that section 815.18(3)(p) is ambiguous and thus embarked on an elaborate examination of legislative history and similar legislation in other states to determine the relationship between 3 See WIS. STAT. § 815.18(2) (defining certain terms in the statute); see also WIS. ADMIN. CODE ADMIN. § 81.02. Nos. 13-1123 & 13-1516 11 the two exemptions. This foray into matters extrinsic to the statute led both judges to conclude that the general exemption in section 815.18(3)(p) covers only the beneficiary’s interest in a college savings account, not the account owner’s interest. Venturing into legislative history was unnecessary, as was the search for guidance from other states. The presence of a beneficiary-specific exemption in section 16.641—the enabling statute for Wisconsin’s college-savings program—does not mean that the general exemption in section 815.18(3)(p) is ambiguous. The general exemption statute is succinct and straightforward: A debtor may exempt “an interest in a college savings account under s. 16.641” from execution by creditors. The lower courts read this text as if it said that a debtor may exempt “[a]n interest in a college savings account that is exempt under s. 16.641.” That reading adds language that is not there, making section 815.18(3)(p) superfluous—a mere duplication of the beneficiary-specific exemption in section 16.641(7). The test for statutory ambiguity in Wisconsin looks to “whether the statutory … language reasonably gives rise to different meanings.” State ex rel. Kalal v. Circuit Court for Dane Cnty., 681 N.W.2d 110, 124 (Wis. 2004) (internal quotation marks omitted). And “[s]tatutory language is read where possible to give reasonable effect to every word, in order to avoid surplusage.” Id. The trustee finds ambiguity in section 815.18(3)(p) only by adding language and turning it into mere surplusage. That’s not a reasonable interpretation of the statute. The general exemption for college savings accounts in section 815.18(3)(p) would have no work to do if it is limited to 12 Nos. 13-1123 & 13-1516 the beneficiary’s interest in the account, which is separately protected by section 16.641(7). Indeed, the trustee’s interpretation of section 815.18(3)(p) actually undermines the interests of college-fund beneficiaries, making section 16.641(7) ineffective. If account owners may not invoke the general exemption in section 815.18(3)(p), as the trustee suggests and the lower courts held, then a college savings plan can be reached by an account owner’s creditors, impairing the beneficiary’s right to qualified withdrawals. The plain-meaning interpretation of section 815.18(3)(p) is the only reasonable one. It’s the only reading of the statute that gives reasonable effect to both exemptions. The general exemption in section 815.18(3)(p) complements the more specific exemption in section 16.641(7), completing the protection for college savings accounts. Accordingly, we hold that section 815.18(3)(p) applies to an account owner’s interest in a section 16.641 college savings account. Bronk was entitled under that section to exempt his interest in the Edvest accounts from the bankruptcy estate.