Opinion ID: 3064379
Heading Depth: 2
Heading Rank: 1

Heading: facts

Text: On October 18, 2001, Edward P. Dittlof (“Dittlof”) created the Edward Dittlof Revocable Trust (“Trust”) under Arizona law. The Trust provided that upon Dittlof’s death, the Trust property would be distributed to several of Dittlof’s children, including Rachelle Costas (“Costas”). Should a beneficiary die prior to distribution, the beneficiary’s children would take the share. Dittlof died on February 25, 2002, leaving Costas an interest worth at least $34,800. Costas, however, refused to accept it and, on November 7, 2002, executed a disclaimer under Arizona law to relinquish her claims to the Trust property. Shortly thereafter, on December 3, 2002, Costas filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code (“the Code”). Maureen Gaughan, the Chapter 7 trustee (“Trustee”), sought to avoid Costas’ disclaimer of the Trust property under 11 U.S.C. § 548. Although a previous BAP panel decision had rejected application of § 548 to similar state law disclaimers, Wood v. Bright (In re Bright), 241 B.R. 664 (9th Cir. BAP 1999), the Trustee argued that the ruling had been undermined by the Supreme Court’s decision in Drye v. United States, 528 U.S. 49 (1999). The Bankruptcy court, however, found Drye distinguishable. The Trustee appealed and, in a thorough opinion, the BAP also distinguished Drye and adhered to its prior decision in Bright. Gaughan v. Costas (In re Costas), 346 B.R. 198 (9th Cir. 2006). The Trustee now appeals from this decision.