Julie Lynn Roe

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UNITED STATES BANKRUPTCY COURT
DISTRICT OF SOUTH DAKOTA
In re: 	) 	Bankr. No. 25-40157
) 	Chapter 7
JULIE LYNN ROE 	)
SSN/ITIN xxx-xx-0942 	) 	DECISION RE: 	TRUSTEE’S
) 	MOTION FOR TURNOVER
Debtor. 	)
The matter before the Court is Chapter 7 Trustee Robert L. Meadors’ Motion
for Turnover and Debtor’s response. 	The Court has jurisdiction over this proceeding
under 28 U.S.C. §1334 and 28 U.S.C. §157(a). 	This is a core proceeding pursuant
to 28 U.S.C. §157(b)(2). 	The Court enters these findings and conclusions pursuant
to Fed.R.Bankr.P. 7052. 	For the reasons discussed below, the Court will grant the
Trustee’s motion.
FACTS
The 	facts 	are 	undisputed. 	Debtor 	Julie 	Lynn 	Roe 	(“Debtor”) 	filed 	for
bankruptcy on June 13, 2025. 	Debtor stated on her Schedule A/B she did not have
any family support payments and did not exempt any alimony on her Schedule C.
However, Debtor reported $2,400.00 per month as income from alimony on her
Schedule I.
A 	Judgment 	and 	Decree 	of 	Divorce 	(“Divorce 	Judgment”) 	was 	entered
December 5, 2024, in the state court action captioned Jeffrey Brian Roe v. Julie
Lynn Roe, Circuit Court, Codington County, South Dakota, 14DIV21-000050. 	The
Divorce Judgment incorporated by reference the terms and conditions of a Property
Settlement Agreement dated December 4, 2023, which was filed in the divorce
action on December 5, 2023 (“Agreement”). 	The relevant part of the Agreement
included the following:
Jeffrey shall pay to Julie lump sum spousal support in the amount of
$274,000.00 payable as follows: $2,400.00 per month for 48 months.
$1,500.00 per month for 105 months. 	$1,300.00 per month for 1
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month. 	Lump sum spousal support is non-modifiable for any reason
including but not limited to death or remarriage. 	Spousal support
payments are due on the 1st day of each month beginning January 1,
2024.
(the “Alimony Award”). 	Debtor has received some Alimony Award payments.
There are two issues before the Court. 	The first issue is whether Debtor’s
interest in the Alimony Award is property of the estate. 	The second issue is whether
the Alimony Award is subject to administration by the Trustee.
DISCUSSION
I. 	Burden of proof
The burden of proof in a turnover proceeding is on the trustee. Evans v.
Robbins, 897 F.2d 966, 968 (8th Cir. 1990); DeBold v. Case (In re Tri-River Trading,
LLC), 329 B.R. 252, 263-64 (B.A.P. 8th Cir. 2005), aff’d 452 F.3d 756 (8th Cir.
2006). 	To establish a prima facie case, “the trustee must demonstrate by clear and
convincing evidence that the assets in question are part of the bankrupt’s estate.”
Id. (citation omitted). 	Once the trustee has established a prima facie case for the
turnover, the burden of explaining or showing the asset is excluded from the estate
shifts to the debtor. Id.
II. Alimony is property of the estate
The first issue is whether Debtor’s interest in the Alimony Award, pursuant to
a prepetition Divorce Judgment, is property of the estate. 	The Trustee argues the
Alimony Award is property of the estate based on existing case law regarding alimony
in South Dakota and prior decisions by this Court. 	Debtor argues the Alimony Award
should not be considered property of the estate because it involves future, contingent
installments and because South Dakota law treats alimony as a personal, non-
transferable, and non-assignable support obligation that typically ends upon death,
remarriage, or modification.
The bankruptcy estate includes “all legal or equitable interests of the debtor in
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property as of the commencement of the case.” 11 U.S.C. §541(a)(1). 1 The
debtor’s interest in the property is determined by state law. Mehlhaff v. Allred (In re
Mehlhaff), 491 B.R. 898, 900 (B.A.P. 8th Cir. 2013) (citing Butner v. United States,
440 U.S. 48, 54 (1979)). 	Once the interest is determined by state law, then federal
bankruptcy law determines the extent to which that interest is property of the estate.
In re Mehlhaff, 491 B.R. at 900.
Certain types of property are expressly excluded from the bankruptcy estate
under 11 U.S.C. §541. In re Mehlhaff, 491 B.R. at 900-01 (citation omitted).
Subsections 541(b), (c)(2), and (d) each address exceptions to section 541(a)(1). Id.
at 901 (citation omitted). 	Property excluded from the bankruptcy estate includes
“powers that the debtor may exercise solely for the benefit of another, interests as
a lessee under certain types of leases, and some types of accounts for retirement or
education 	purposes.” 	Id. 	Also, 	property 	subject 	to 	transfer 	restrictions 	under
enforceable nonbankruptcy law, like spendthrift trusts and social security benefits,
are expressly excluded from the bankruptcy estate. Id. (citing In re Steen, 2012 WL
1252668 at *2 (Bankr. D.S.D. Apr. 13, 2012); 11 U.S.C. §541(c)(2); Patterson v.
Shumate, 504 U.S. 753, 756-65 (1992) (spendthrift trust); Wear v. Green (In re
Green), 967 F.2d 1216, 1217 (8th Cir. 1992) (spendthrift trust); Carpenter v. Ries
(In re Carpenter), 614 F.3d 930, 936-37 (8th Cir. 2010) (social security benefits)).
Alimony is not listed as one of the exclusions under Section 541.
Debtor’s interest created by the divorce decree became property of the
bankruptcy estate upon Debtor filing her bankruptcy petition. In re Steen, 2012 WL
1252668 at *3; Cf. Ellis v. Ellis (In re Ellis), 72 F.3d 628, 633 (8th Cir. 1995). 	This
Court has specifically determined alimony can be property of the estate. See In re
McGee, 2015 WL 5829864 (Bankr. D.S.D. Oct. 6, 2015) (the pre-petition alimony
award was property of the bankruptcy estate to the extent of the unpaid portion as
1 Debtor's court ordered interest in the alimony payments arose pre-petition so 11 U.S.C.
§541(a)(5)(B) does not apply.
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of the petition date); In re Mehlhaff, 491 B.R. at 901 (stream of alimony payments
and the right debtor had on the date of filing to receive alimony payments are
property of the estate and subject to turnover); and In re Steen, 2012 WL 1252668
at *3 (unpaid alimony award on date of filing was property of the estate). 	Two of
these decisions were issued prior to the enactment of the state alimony exemption
statute under S.D.C.L. §43-45-2(9), but McGee was decided after its enactment.
Debtor argues the alimony payments are not property of the estate because
they are “future, undue alimony installments.” 	However, Debtor’s argument fails
because 	contingent 	interests 	in 	future 	payments 	are 	not 	excluded 	from 	the
bankruptcy estate. Wetzel v. Regions Bank, 649 F.3d 831, 835 (8th Cir. 2011)
(citing Law v. Stover (In re Law), 336 B.R. 780, 782 (B.A.P. 8th Cir. 2006)).
Debtor further argues the Court’s previous holdings in Mehlhaff and Steen are
limited to vested, accrued payments overdue on the petition date and do not extend
to future payments. In re Mehlhaff, 491 B.R. 898; In re Steen, 2012 WL 1252668
at *3. 	Debtor has misstated these holdings and has also failed to address the most
recent holding by the Court in McGee regarding alimony. In re McGee, 2015 WL
5829864.
Debtor’s “vesting” argument also fails because the right to alimony vests when
the judgment awarding it is entered, not when the money is actually received. In re
Mehlhaff, 491 B.R. at 902. 	The scope of section 541(a) is broad enough to include
property of all descriptions, tangible and intangible, as well as causes of action. Id.
(citing Ramsay v. Dowden (In re Cent. Ark. Broad Co.), 68 F.3d 213, 214 (8th Cir.
1995) (internal citation omitted)). 	When a debtor receives a prepetition judgment
against another party, the bankruptcy estate consists of all rights that existed under
that 	judgment. 	In 	re 	Mehlhaff, 	491 	B.R. 	at 	902 	(citation 	omitted). 	When 	a
bankruptcy petition is filed, the trustee steps into the shoes of the debtor, taking
whatever interests the debtor had as of the date of the petition. Id.; Stumpf v.
Albracht, 982 F.2d 275, 277 (8th Cir. 1992).
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Debtor fails to cite any case law in South Dakota holding the right to alimony
is not property of the estate, and the Court is not persuaded by Debtor’s argument
that alimony should not be turned over because it is a personal, non-transferable,
and non-assignable right of Debtor. 	The Supreme Court of South Dakota has held
“a person’s right to receive alimony payments is a right which can be subject to
attachment of an attorney’s lien.” In re Mehlhaff, 491 B.R. at 902 (citing Jasper v.
Smith, 540 N.W.2d 399 (S.D. 1995)). 	The Supreme Court of South Dakota has
held attorney’s liens can attach to alimony payments, which does not violate the
public policy of this state. Jasper v. Smith, 540 N.W.2d at 403-04 (footnote
omitted). 	If alimony is the kind of property right to which a lien can attach, then it
is the kind of property right that becomes part of the bankruptcy estate. In re
Mehlhaff, 491 B.R. at 903. 	Even if the alimony award is modifiable, that only
affects the amount of alimony the estate might receive, not the estate’s right to
receive it. Id. (citations omitted). 	Therefore, a pre-petition alimony award is property
of the estate.
Property a debtor exempts can be removed from the bankruptcy estate by
applicable state or federal exemption laws. 11 U.S.C. §522(b) and (c). 	South
Dakota is an opt-out state, meaning debtors are limited to the exemptions provided
by South Dakota law. In re Mehlhaff, 491 B.R. at 901. 	Under South Dakota law an
alimony award may be absolutely exempt from all process, levy, or sale, except as
otherwise provided by law, if it is:
Any court ordered domestic support award of alimony, maintenance, or
support of the debtor which is not a gross or lump sum and does not
exceed seven hundred fifty dollars per month.
S.D.C.L. §43-45-2(9) (2025).
The first requirement for the Alimony Award to be exempt under S.D.C.L. §43-
45-2(9) is met as the Stipulated Facts and the parties describe it as such, and neither
party argues it is not a “court ordered domestic support award of alimony…of the
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debtor.” 	The second requirement is conjunctive and requires that the alimony award
is not a gross or lump sum and does not exceed $750.00 per month.
When determining the type of alimony, courts look toward the nature of the
award instead of the label placed on it. Vandyke v. Choi, 888 N.W.2d 557, 563-64
(S.D. 2016). 	Generally, permanent alimony consists of continuous payments until
the death of either party, the remarriage of the recipient, or there is no longer a need
for continuing support. Id. at 564. (citation omitted). Conditions like remarriage,
death, or employment are typical with permanent alimony. Id. (citation omitted). 	In
South Dakota, permanent alimony may be for a shorter period of time, meaning
permanent alimony does not need to continue for the recipient’s entire lifetime. Id.
In 	contrast, 	lump-sum 	awards 	are 	“final 	adjustment[s] 	of 	mutual 	rights 	and
obligations as to be capable of a present vesting and . . . absolute judgment.” Id.
(citing Oman v. Oman, 702 N.W.2d 11, 15 (S.D. 2005)) (internal citation omitted).
Once the lump-sum award has vested, the right to payment is not subject to any
conditions on the award. Id. 	A trial court cannot modify a lump-sum award, even if
it is payable in installments over a fixed period. Id. (citation omitted). 	Conditions
that 	terminate 	future 	installments 	defeat 	the 	finality 	that 	attaches 	to 	and
distinguishes lump-sum awards. Id. 	Therefore, the South Dakota Supreme Court
makes no distinction between lump-sum payable in gross or in installments. Id. (citing
Saxvik v. Saxvik, 544 N.W.2d 177, 180 (S.D. 1996) (“[T]he sum is not modifiable
even if it is payable in installments over a fixed period of time.”)).
In accordance with Vandyke v. Choi, a lump sum alimony award is not
modifiable whereas a permanent alimony award may contain conditions making it
modifiable. 	888 	N.W.2d 	at 	564. 	Debtor’s 	Divorce 	Judgment 	incorporates 	by
reference the terms and conditions of a certain Property Settlement Agreement
(“Agreement”). 	Therefore, the Alimony Award is contained within a “Property
Settlement 	Agreement” 	indicating 	at 	first 	blush, 	though 	not 	determinative 	in
establishing the type of award, it is a property settlement and not an alimony award.
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More importantly, the Agreement at paragraph 10 contains no modifications to the
Alimony Award. 	It states the Alimony Award is “non-modifiable for any reason
including but not limited to death or remarriage.” 	It also defines the Alimony Award
as “[l]ump sum spousal support.” 	Therefore, in analyzing the nature of the award,
the Court finds the Alimony Award is non-modifiable making it a “gross or lump sum”
award.
In addition, the Alimony Award is paid at $2,400.00 per month, $1,500.00
per month, and $1,300.00 per month at various times under the Agreement. 	Every
monthly amount in the Alimony Award exceeds the $750.00 per month maximum
set forth in S.D.C.L. §43-45-2(9), so Debtor’s Alimony Award does not meet either
prong of the second requirement of S.D.C.L. §43-45-2(9).
Therefore, 	Debtor’s 	interest 	in 	the 	Alimony 	Award 	is 	property 	of 	the
bankruptcy estate and Debtor cannot exempt it under S.D.C.L. §43-45-2(9).
III. Alimony subject to administration by the Trustee
The second issue before the Court is whether the Alimony Award is not subject
to administration by the Trustee because it is personal, non-transferable, and non-
assignable. 	Debtor argues if the Court finds any portion of the Alimony Award to
be property of the estate, South Dakota law and federal precedent guard the personal
and non-transferable character of alimony. 	The Trustee argues the Alimony Award
is property of the estate, and Debtor, having exempted none of it, is required to turn
all of it over to the Trustee.
Debtor, relying on Jasper v. Smith, 540 N.W.2d 399, 403 (S.D. 1995), argues
the South Dakota Supreme Court intended alimony to be for personal support, not
an assignable or liquidated asset. 	Additionally, Debtor believes Jasper determined
that liens and turnover rights are limited by the personal, equitable nature of support
obligations. 	As addressed above, the court in Jasper found nothing in its “review
of the constitution, statutes, and case law of [South Dakota] . . . which would
prohibit an attorney’s lien against an award of alimony[.]” Id. 	The court held “an
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attorney’s lien against an alimony award does not violate the public policy of this
state[.]” Id. at 404. 	In addition, the South Dakota Supreme Court expressly rejected
public policy as a basis to protect alimony from at least certain kinds of creditors. In
re Mehlhaff, 491 B.R. at 904 (citing Jasper, 540 N.W.2d at 403-04). 	The Court
concurs with the analyses in Mehlhaff and Jasper. 	Therefore, if an award for
alimony existed on the date the petition was filed, the alimony award is part of the
bankruptcy estate and subject to turnover.
Additionally, 	Congress 	has 	provided 	a 	specific 	exemption 	for 	alimony
payments. 11 U.S.C. §522(d)(10)(D). 	In 2014, South Dakota also created a specific
exemption for alimony payments. S.D.C.L. §43-45-2(9). 	If alimony was not meant
to be included as part of the bankruptcy estate, there would be no need for federal
and state exemptions.
Debtor’s Alimony Award is property of the estate pursuant to 11 U.S.C.
§541(a)(1), Debtor cannot exempt it under S.D.C.L. §43-45-2(9) because it is a
gross or lump sum and exceeds the maximum monthly dollar amount, and it must be
turned over to the Trustee for administration, absent Debtor’s right to timely amend
and exempt the alimony under any remaining portion of her allowed exemption under
S.D.C.L. §43-45-4.
CONCLUSION
For the reasons stated herein, Trustee Meadors’ motion shall be granted. 	The
Court will enter a separate order following the entry of this decision.
So ordered: 	December 31, 2025.
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