Thursday, November 29, 2012

In re Pizzi case brief (lottery winnings)


Case:  In re Pizzi (Bankr. SD Fla. 1993)

Subject: "Are lottery winnings exempt assets in bankruptcy law?"
 
Facts: The debtor won the lottery. The winner filed bankruptcy but has 12 more annual payments due. 
 
Issue: Are the proceeds from lottery winnings exempt from creditor's claims under Florida law? Do they fall within the definition of annuity under Fla. Stat. §222.14?

Holding: No! Lottery winnings are nonexempt assets and must be liquidated to pay the creditors in a bankruptcy.

Analysis: Connecticut purchased an annuity for $1M to pay her $3M prize for the benefit of debtor. The state comptroller would then issue the lottery checks for 19 years. The state is listed as the owner and beneficiary of the contract. The lottery doesn’t refer to the winnings as proceeds of an annuity and the winner isn’t a beneficiary or payee of an annuity.
-If the winner is named as beneficiary to fund a state’s obligation, the winnings may be exempt though.

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