                                                           FILED
                                                            APR 11 2013
 1
                                                        SUSAN M SPRAUL, CLERK
 2                                                        U.S. BKCY. APP. PANEL
                                                          OF THE NINTH CIRCUIT

 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                            OF THE NINTH CIRCUIT
 5   In re:                        )      BAP No. EC-12-1537-DJuMk
                                   )
 6   SANTIAGO OMAR HERNANDEZ and   )      Bk. No. 12-24502
     MICHELLE PATRICE HERNANDEZ,   )
 7                                 )
                    Debtors.       )
 8   ______________________________)
                                   )
 9   SANTIAGO OMAR HERNANDEZ;      )
     MICHELLE PATRICE HERNANDEZ,   )
10                                 )
                    Appellants,    )
11                                 )
     v.                            )      MEMORANDUM1
12                                 )
     J. MICHAEL HOPPER, Trustee,   )
13                                 )
                    Appellee.      )
14   ______________________________)
15                   Argued and Submitted on March 22, 2013
                            at Sacramento, California
16
                             Filed - April 11, 2013
17
               Appeal from the United States Bankruptcy Court
18                 for the Eastern District of California
19      Honorable Christopher M. Klein, Bankruptcy Judge, Presiding
20
     Appearances:     George T. Burke, Esq., argued for the Appellants
21                    Santiago and Michelle Hernandez; J. Luke Hendrix,
                      Esq., argued for Appellee J. Michael Hopper,
22                    Trustee.
23
     Before:   DUNN, JURY, and MARKELL, Bankruptcy Judges.
24
25
26        1
            This disposition is not appropriate for publication.
27   Although it may be cited for whatever persuasive value it may
     have (see Fed. R. App. P. 32.1), it has no precedential value.
28   See 9th Cir. BAP Rule 8013-1.
 1           The debtors Santiago and Michelle Hernandez (“Debtors”)
 2   appeal the bankruptcy court’s orders sustaining the chapter 7
 3   trustee’s (“Trustee”) objection (“Objection”) to their exemption
 4   claim in Ms. Hernandez’s contingent beneficial interest in her
 5   mother’s irrevocable trust (“Trust”) and denying their Motion for
 6   Amended Findings seeking to reverse the prior order sustaining
 7   the Objection.2      We AFFIRM both of the bankruptcy court’s orders.
 8                                      FACTS
 9           The background facts in this appeal are not in dispute.    On
10   March 7, 2012, the Debtors filed their voluntary chapter 7
11   petition, commencing their bankruptcy case.      Trustee is the duly
12   appointed trustee in the Debtors’ bankruptcy case.
13           On the date of the Debtors’ bankruptcy filing, Ms. Hernandez
14   was a named beneficiary of The Patricia A. Johnson Irrevocable
15   Trust No. 1 (“Trust”), established by her mother as settlor under
16   a trust agreement (“Trust Agreement”) signed on November 26,
17   2001.       Ms. Hernandez’s beneficial interest in the Trust was (and
18   is) contingent, in that under Article Three, Section B of the
19   Trust Agreement, Ms. Hernandez would have to survive her mother
20   in order to receive a mandatory distribution of Trust principal.
21   Ms. Hernandez’s mother was living on the petition date and was
22   still living throughout the period relevant to this appeal.
23           Article Two, Section A of the Trust Agreement provides that,
24   “Each time a gift is made by any donor to a trust governed by
25
26           2
            Unless otherwise indicated, all chapter and section
27   references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and
     all “Rule” references are to the Federal Rules of Bankruptcy
28   Procedure, Rules 1001-9037.

                                         -2-
 1   this agreement, the beneficiary of that trust shall have the
 2   immediate right to demand and receive [sic] immediate amount that
 3   may be withdrawn shall be the amount of the Internal Revenue Code
 4   section 2503(b) annual gift tax exclusion remaining available to
 5   the donor for gifts made to the distribution rights holder in the
 6   calendar year in which the gift is made. . . .”   Under Article
 7   Two, Section C of the Trust Agreement, the right to demand
 8   distribution expires if a written notice is not delivered to the
 9   trustee of the Trust within forty-five days following the date of
10   the gift.
11        Article Six, Section B of the Trust Agreement states a
12   spendthrift trust provision (“Spendthrift Trust Provision”):
13        No interest in the principal or income of any trust
          created under this instrument shall be voluntarily or
14        involuntarily anticipated, assigned, encumbered, or
          subjected to creditor’s claim or legal process before
15        actual receipt by the beneficiary.
16   Debtors and the Trustee agree that the Spendthrift Trust
17   Provision is valid under California law.
18        In their schedules filed with their bankruptcy petition, on
19   Schedule B, the Debtors identified a Trust interest of
20   Ms. Hernandez, valued at $7,000, as follows:
21        Future beneficiary of Mother’s Irrevocable Trust – Mrs.
          Hernandez had 45 day window after November 18, 2011 to
22        withdraw $6,872 from annual gift to Trust but did not
          withdraw, as per Mother’s indicated preference.
23
24   In their Schedule C, the Debtors claimed a corresponding
25   exemption in the amount of $7,000 in the $6,782 annual gift to
26   the Trust under California Code of Civil Procedure (“C.C.P.”)
27
28

                                    -3-
 1   § 703.140(b)(5).3
 2        On June 22, 2012, the Debtors amended their Schedule C to
 3   claim an exemption in “100% of Fair Market Value” of the Trust
 4   under § 541(c)(2).4   The Trustee filed a timely objection
 5   (“Objection”) to the exemption claimed in the Trust.   The Trustee
 6   first argued that § 541(c)(2) did not provide a valid basis to
 7   claim an exemption.   The Trustee further argued that the Debtors
 8   did not provide any description of the value of the Trust, and
 9   there was no clear statement as to what assets were included in
10   the Trust.   The Trustee stated that the Objection was filed “to
11   protect the bankruptcy estate’s interest in at least 25% of the
12   Debtors’ beneficial interest in the Trust.”
13        The Debtors responded to the Objection that Ms. Hernandez’s
14   contingent interest in the Trust was excluded from the Debtors’
15   bankruptcy estate under § 541(c)(2) and further argued that
16   California Probate Code (“C.P.C.”) § 15306.5(a) did not apply to
17   allow the Trustee to claim up to 25% of Ms. Hernandez’s
18
19
20
          3
            Under C.C.P. § 703.140(b)(5), California debtors can claim
21
     an exemption in the amount of up to $925 in any property, plus
22   any amount up to $17,425 that is not otherwise used to exempt
     value of “real property or personal property that the debtor or a
23   dependent of the debtor uses as a residence, in a cooperative
24   that owns property that the debtor or a dependent of the debtor
     uses as a residence, or in a burial plot for the debtor or a
25   dependent of the debtor” under C.C.P. § 703.140(b)(1).
26        4
            Section 541(c)(2) provides that, “A restriction on the
27   transfer of a beneficial interest of the debtor in a trust that
     is enforceable under applicable nonbankruptcy law is enforceable
28   in a case under this title.”

                                     -4-
 1   contingent future interest in the Trust.5
 2        The bankruptcy court held a hearing (“Objection Hearing”) on
 3   the Objection on August 28, 2012.     At the Objection Hearing, the
 4   bankruptcy court heard argument from counsel for the Debtors and
 5   the Trustee and, determining that there were no factual issues,
 6   announced its conclusions of law based on the record before it,
 7   sustaining the Objection.   At the Objection Hearing, Trustee’s
 8   counsel confirmed that the Trustee sought no more than a
 9   conclusion that “25 percent of the [Trust] is not excluded from
10   the estate under 541(c)(2).”   The Trustee did not seek turnover
11   of any Trust interest or any particular Trust assets.    The
12   bankruptcy court entered a minute order sustaining the Objection
13   on September 3, 2012.
14        The Debtors filed their Motion for Amended Findings on
15   September 10, 2012, arguing that the bankruptcy court made a
16   manifest error of law in determining that the Trustee could claim
17   25% of Ms. Hernandez’s contingent future interest in the Trust as
18
19        5
            C.P.C. § 15306(a) provides that, “Notwithstanding a
20   restraint on transfer of the beneficiary’s interest in the trust
     under Section 15300 or 15301, and subject to the limitations of
21   this section, upon a judgment creditor’s petition under
22   Section 709.010 of the Code of Civil Procedure, the court may
     make an order directing the trustee to satisfy all or part of the
23   judgment out of the payments to which the beneficiary is entitled
     under the trust instrument or that the trustee, in the exercise
24
     of trustee’s discretion, has determined or determines in the
25   future to pay the beneficiary.” However, C.P.C. § 15306.5(b)
     limits the scope of the preceding subsection (a), as follows: “An
26   order under this section may not require that the trustee pay in
27   satisfaction of the judgment an amount exceeding 25% of the
     payment that otherwise would be made to, or for the benefit of,
28   the beneficiary.”

                                     -5-
 1   an asset of the estate.    The Trustee responded, arguing that the
 2   Debtors were not entitled to the extraordinary remedy requested
 3   in the Motion for Amended Findings in that the Debtors presented
 4   no new authorities or facts that would justify the relief
 5   requested.
 6        The bankruptcy court heard arguments on the Motion for
 7   Amended Findings on October 9, 2012, and stated its conclusions
 8   orally, denying the Motion for Amended Findings.      The bankruptcy
 9   court entered a minute order denying the Motion for Amended
10   Findings on October 9, 2012.
11        The Debtors filed a timely Notice of Appeal from the order
12   sustaining the Objection and the order denying the Motion for
13   Amended Findings on October 19, 2012.
14                                JURISDICTION
15        The bankruptcy court had jurisdiction under 28 U.S.C.
16   §§ 1334 and 157(b)(2)(A) and (B).       We have jurisdiction under
17   28 U.S.C. § 158.
18                               ISSUE PRESENTED
19        Did the bankruptcy court err as a matter of law in
20   determining that Ms. Hernandez’s contingent future interest in
21   the Trust was an asset of the bankruptcy estate and that the
22   Trustee could claim up to 25% of Ms. Hernandez’s contingent
23   future interest in the Trust for the estate?
24                             STANDARDS OF REVIEW
25        We review issues of statutory construction and conclusions
26   of law de novo.    Ransom v. MBNA Am. Bank, N.A. (In re Ransom),
27   380 B.R. 799, 802 (9th Cir. BAP 2007), aff’d, 577 F.3d 1026 (9th
28   Cir. 2009), aff’d, 131 S. Ct. 716 (2011).

                                       -6-
 1         We may affirm on any ground supported by the record.     Shanks
 2   v. Dressel, 540 F.3d 1082, 1086 (9th Cir. 2008).
 3                               DISCUSSION
 4   1.   Dealing with Procedural Anomalies
 5         Debtors have not raised any procedural irregularity as an
 6   issue in this appeal and did not discuss any procedural issue in
 7   their opening brief.   Accordingly, any such issues are waived.
 8   See Arpin v. Santa Clara Valley Transp. Agency, 261 F.3d 912, 919
 9   (9th Cir. 2001) (issues not specifically argued in opening brief
10   are waived).   Nevertheless, there are procedural anomalies in
11   this case that merit discussion in order to provide a complete
12   understanding of the record.   Accordingly, before we get to the
13   heart of this appeal, we take a brief stroll down a procedural
14   byway.
15         The events leading to this appeal were initiated by the
16   Debtors filing an amended Schedule C claiming that 100% of the
17   fair market value of Ms. Hernandez’s contingent future interest
18   in the Trust was “exempt” under § 541(c)(2).   As the trustee
19   pointed out in the Objection, § 541(c)(2) does not provide a
20   valid basis for a claim of exemption.    Rather, § 541(c)(2)
21   provides a basis for excluding certain trust assets from the
22   estate.   In their response to the Objection, the Debtors embraced
23   the concept that Ms. Hernandez’s beneficial interest in the Trust
24   was excluded from the bankruptcy estate, and the fight was on.
25         An estate in bankruptcy consists of all the interests
           in property, legal and equitable, possessed by the
26         debtor at the time of filing, as well as those
           interests recovered or recoverable through transfer and
27         lien avoidance provisions. An exemption is an interest
           withdrawn from the estate . . . for the benefit of the
28         debtor.

                                     -7-
 1   Owen v. Owen, 500 U.S. 305, 308 (1991).   See Gebhart v. Gaughan
 2   (In re Gebhart), 621 F.3d 1206, 1210 (9th Cir. 2010); McLain v.
 3   Newhouse (In re McLain), 516 F.3d 301, 315 (5th Cir. 2008)
 4   (“‘[P]roperty that is entitled to be exempted is initially
 5   regarded as estate property until it is claimed and distributed
 6   as exempt.’”) (quoting Cyrak v. Poynor, 80 B.R. 75, 79 (N.D. Tex.
 7   1987); Bronner v. Gill (In re Bronner), 135 B.R. 645, 647 (9th
 8   Cir. BAP 1992) (“A debtor . . . may remove or acquire property of
 9   the estate by claiming exemptions.”) (emphasis in original).
10        Procedurally, the Objection was handled as a contested
11   matter.   Arguably, since the issues actually determined were
12   whether all or any portion of Ms. Hernandez’s contingent future
13   beneficial interest in the Trust was property of the estate, the
14   bankruptcy court could have required that the matter be resolved
15   in an adversary proceeding pursuant to Rule 7001(1), (2) or (9).6
16   Our review of the transcript of the Objection Hearing leads us to
17   suspect that the bankruptcy court considered sustaining the
18   Objection on the basis that § 541(c)(2) did not provide an
19   appropriate basis for an exemption claim and leaving the
20   “property of the estate” issue(s) for further proceedings.
21   However, after confirming that the necessary evidentiary record
22   was complete, and there were no factual disputes between the
23
24        6
            Rule 7001 provides in relevant part: “The following are
25   adversary proceedings: (1) a proceeding to recover money or
     property, other than a proceeding to compel the debtor to deliver
26   property to the trustee, . . . ; (2) a proceeding to determine
27   the validity, priority, or extent of a lien or other interest in
     property, . . . ; (9) a proceeding to obtain a declaratory
28   judgment relating to any of the foregoing; . . . .”

                                     -8-
 1   parties, the bankruptcy court proceeded to rule on the legal
 2   questions presented.
 3        The bankruptcy court did not err in so proceeding.     “[A]
 4   bankruptcy court’s decision not to require an adversary
 5   proceeding is subject to a harmless error analysis, and under
 6   that standard, if the failure to commence an adversary proceeding
 7   did not cause prejudice, form should not be elevated over
 8   substance.”   Stasz v. Gonzalez (In re Stasz), 2011 WL 3299162
 9   (9th Cir. BAP 2011), citing Austein v. Schwartz (In re Gerwer),
10   898 F.2d 730, 734 (9th Cir. 1990); and Korneff v. Downey Reg’l
11   Med. Ctr.-Hosp., Inc. (In re Downey Reg’l Med. Ctr.-Hosp., Inc.),
12   441 B.R. 120, 127-28 (9th Cir. BAP 2010).
13        The Debtors did not raise any objection to the bankruptcy
14   court handling the Objection as a contested matter in their
15   response to the Objection or in any of their papers filed in
16   support of the Motion for Amended Findings, nor did they raise
17   any such objection at the Objection Hearing.   At the hearing on
18   the Motion for Amended Findings, the following colloquy between
19   the court and counsel took place:
20        MR. BURKE: Your Honor, it’s my understanding that a
          party can object to jurisdiction at any time in the
21        proceedings. At this point, we’d like to move to
          vacate the judgment based on a lack of subject matter
22        jurisdiction. The Trustee –
23        THE COURT: A lack of subject matter jurisdiction?
24        MR. BURKE: The Trustee objected to an exemption. We’re
          claiming that the [T]rust is excluded. It’s not an
25        exemption. And they should have to file an adversary
          proceeding, Your Honor, to determine the ownership of
26        the [T]rust.
27        THE COURT: Mr. Hendrix, is this the first you heard of
          that?
28

                                     -9-
 1          MR. HENDRIX: It is, Your Honor.
 2   Tr. Of October 9, 2012 hr’g, 9:9-22.     Debtors’ counsel did not
 3   allege that the Debtors had suffered any prejudice from the
 4   bankruptcy court’s handling of the Objection as a contested
 5   matter.    The bankruptcy court went on to explain why Debtors’
 6   counsel was not raising any legitimate question as to the
 7   bankruptcy court’s subject matter jurisdiction and proceeded to
 8   deny the Motion for Amended Findings based on its conclusion that
 9   it had not erred as a matter of law in its prior decision.       As
10   noted above, Debtors have not raised any question as to the
11   bankruptcy court’s handling of the Objection as a procedural
12   matter in this appeal.
13   2.   Contingent Trust Interests as Property of the Estate
14          The primary problem for Debtors in this appeal is we are not
15   writing on a clean slate.   The Debtors concede that under
16   § 541(a), “contingent interests are part of the bankruptcy
17   estate.”   Appellants’ Opening Brief at 13.    The Debtors also
18   concede that the relevant date for determining whether an asset
19   is property of the estate is the petition date.     Id. at 34.    See
20   Cisneros v. Kim (In re Kim), 257 B.R. 680, 687 (9th Cir. BAP
21   2000).    However, Debtors insist that Ms. Hernandez’s entire
22   contingent future interest in the Trust is excluded from the
23   estate under § 541(c)(2) based on the Spendthrift Trust Provision
24   “that is enforceable under applicable nonbankruptcy law.”
25          The Trustee concedes the existence of the Spendthrift Trust
26   Provision and that such provisions are valid under California
27   law.   See Appellee’s Opening Brief at 6.     However, the Trustee
28   further argues that the Spendthrift Trust Provision is subject to

                                      -10-
 1   the restrictions on such restraints on alienation set forth in
 2   C.P.C. § 15306.5.   Accordingly, § 541(c)(2) only operates “to
 3   exclude 75% of the Debtors’ interest in the Trust from property
 4   of the bankruptcy estate.”   Id. at 7.
 5        The Debtors respond that the issue as to whether the
 6   bankruptcy estate has an interest in the remaining 25% of
 7   Ms. Hernandez’s contingent beneficial interest in the Trust is an
 8   issue of first impression that requires a detailed analysis of
 9   the provisions of C.P.C. § 15306.5.    In essence, Debtors ask us
10   to make a prediction as to how the California Supreme Court would
11   rule if confronted with the issues before us.   However, we
12   decline that invitation because that prediction already
13   effectively has been made in binding prior decisions of the Ninth
14   Circuit and this Panel.
15        In Neuton v. Danning (In re Neuton), 922 F.2d 1379 (9th Cir.
16   1990), the Ninth Circuit was confronted with the following
17   situation: The debtor-appellant (“Neuton”) had filed a chapter 7
18   bankruptcy petition on November 12, 1987.   At the time of his
19   bankruptcy filing, Neuton had a contingent future interest in a
20   spendthrift trust established by his mother (the “Neuton Trust”).
21   The Neuton Trust provided that its trustee would pay a portion of
22   trust income to Neuton’s mother during her lifetime and a portion
23   of trust income to her children, including Neuton, after her
24   death.   Neuton’s mother died on December 28, 1987, “at which
25   point [Neuton’s] interest in the trust vested.”   Id. at 1381.      On
26   January 25, 1988, the trustee objected to Neuton’s claim of
27   exemption in the Neuton Trust beyond a value of $1,135 claimed as
28   exempt in Neuton’s schedules.   On April 7, 1988, the bankruptcy

                                     -11-
 1   court issued a Memorandum Decision and Order, essentially
 2   recognizing that 75% of Neuton’s interest in the Neuton Trust was
 3   excluded from the estate under § 541(c)(2), but holding that 25%
 4   of Neuton’s interest in the trust belonged to the estate.   Id.
 5   On appeal, this Panel affirmed those holdings but remanded for
 6   valuation purposes.
 7        On further appeal, the Ninth Circuit held that in light of
 8   the expansive definition of property of the estate under the
 9   Bankruptcy Code, “contingent interests of the type at issue in
10   this case” constitute property of the estate, citing the Supreme
11   Court decision in Segal v. Rochelle, 382 U.S. 375 (1966).   Neuton
12   made the same argument to the Ninth Circuit that the Debtors make
13   before us: Since the Neuton Trust had a valid spendthrift trust
14   provision under California law, Neuton’s entire interest in the
15   Neuton Trust was excluded from the estate by § 541(c)(2).
16        The Ninth Circuit agreed with him as to 75% of his interest
17   in the Neuton Trust, but after considering the provisions of
18   C.P.C. §§ 15301-15307, rejected Neuton’s claim as to up to 25% of
19   his interest in the trust.
20        [T]he Probate Code provides that despite such
          restraints a creditor may obtain an “order directing
21        the trustee to satisfy all or part of the judgment out
          of the payment to which the beneficiary is entitled
22        under the trust instrument,” so long as the payment
          does not “exceed[ ] 25% of the payment that otherwise
23        would by made to . . . the beneficiary.” [C.P.C.]
          § 15306.5. In other words, the spendthrift restriction
24        fully protects only 75% of the interest in the trust.
          Because the trustee enjoys the power of a hypothetical
25        judgment creditor, [§ ] 544(a)(1), we agree with the
          BAP that the remaining one-fourth is not excluded from
26        the estate pursuant to [§ ] 541(c)(2). In short, the
          bankruptcy estate possesses an income interest in one-
27        fourth of the payments due to Neuton . . . The
          relevance of § 15306.5 is that it removes 25% of
28        [Neuton’s] interest in the trust from traditional

                                    -12-
 1        spendthrift status.
 2   Id. at 1383 (emphasis added).
 3        The Debtors argue that the Neuton decision is
 4   distinguishable from this appeal in that the Ninth Circuit did
 5   not engage in “statutory construction” with respect to
 6   § 15306.5(a) and “did not even analyze C.P.C. 15306.5(a).”
 7   Appellants’ Opening Brief at 7 and 9.    To make that argument in
 8   light of the extensive analysis of the application of C.P.C.
 9   § 15306.5, as a matter of first impression, set forth in the
10   Ninth Circuit’s Neuton decision is nonsense.    However, whatever
11   level of analysis the Ninth Circuit applied in considering the
12   application of C.P.C. § 15306.5 in Neuton, its decision has never
13   been overruled, and the bankruptcy court correctly determined,
14   and we concur, that to the extent Neuton applies in this appeal,
15   we are bound by it.
16        In one significant respect, Neuton is distinguishable from
17   the appeal before us, as the contingent trust interest in Neuton
18   was an interest in future income only and did not involve trust
19   principal.   Id. at 1381 and 1382 n.2.   That distinction possibly
20   would have more traction if the issue had not been dealt with
21   directly in two subsequent published opinions of this Panel.
22        In Cisneros v. Kim (In re Kim), 257 B.R. 680 (9th Cir. BAP
23   2000), this Panel considered a different form of California
24   “trust.”   At the time of his chapter 7 bankruptcy filing, the
25   debtor (“Kim”) was employed as a bus driver for the Los Angeles
26   Metropolitan Transit Authority and was a beneficiary of the Los
27   Angeles County Metropolitan Transportation Authority Retirement
28   Income Plan (the “MTA Plan”).   Kim claimed an exemption in his

                                     -13-
 1   “retirement funds” under the MTA Plan pursuant to C.C.P.
 2   § 704.110.7   Subsequent to his bankruptcy filing, Kim withdrew
 3   his retirement funds from the MTA Plan and rolled them over into
 4   an IRA account.
 5        The trustee objected to Kim’s exemption claim on three
 6   grounds: 1) the retirement funds were not being used for
 7   retirement purposes; 2) the MTA Plan was not a spendthrift trust
 8   subject to exclusion from the estate; and 3) Kim was not
 9   otherwise entitled to an exemption under California law.   The
10   bankruptcy court ultimately determined that the retirement funds
11   held in the MTA Plan on the petition date were fully exempt under
12   California law.   It also held that the MTA Plan was a valid
13   spendthrift trust under California law, which excluded the
14   retirement funds from the bankruptcy estate, except for 25% of
15   the funds, which remained subject to creditor claims under
16   California law.   Id. at 683.
17        On appeal, this Panel held that “[t]he bankruptcy court did
18   not err in holding that the relevant date for determining the
19   status of the exemptions was the petition date.”   Id. at 685.
20   The Panel also noted that the holdings of the bankruptcy court
21   were correct in concluding that the MTA Plan was a valid
22   spendthrift trust under California law and that Kim’s interest in
23   the MTA Plan was excluded from the estate “except for 25%.”    Id.
24   at 688.
25
26        7
            C.C.P. § 704.110 provides an exemption for “all amounts
27   held, controlled or in process of distribution” as retirement
     benefits from a “public entity” such as a state, city or county
28   government or a public corporation or board.

                                     -14-
 1        [T]he [C.P.C.] has limited the scope of the spendthrift
          protection. [C.P.C.] section 15306.5 provides that a
 2        judgment creditor may obtain an “order directing the
          trustee to satisfy all or part of the judgment out of
 3        the payment to which the beneficiary is entitled under
          the [spendthrift] trust instrument, . . .” as long as
 4        the payment does not exceed 25 percent of the funds
          otherwise available to the beneficiary. See [C.P.C.]
 5        § 15306.5 (West 1991). The bankruptcy court, applying
          section 15306.5 and following [Neuton], held that only
 6        75% of the spendthrift trust was excluded from the
          estate.
 7
 8   Id. at 683 n.4.     Accordingly, in Kim, this Panel followed the
 9   Neuton interpretation of C.P.C. § 15306.5 in a context involving
10   the principal, rather than income, of a spendthrift trust.
11        Finally, in Bendon v. Reynolds (In re Reynolds), 479 B.R. 67
12   (9th Cir. BAP 2012), this Panel was confronted with a spendthrift
13   trust situation similar to what we face in this appeal.     The
14   debtor (“Reynolds”) was a named beneficiary in three family
15   trusts, the Bypass Trust, the Marital Trust and the Survivor’s
16   Trust.    (Hereafter, the Bypass Trust and the Marital Trust are
17   referred to collectively as the “Family Trust.”) If Reynolds
18   survived his father by thirty days, he would be entitled to
19   receive distributions from both the Family Trust and the
20   Survivor’s Trust.
21        From the Family Trust, [Reynolds] was entitled to
          $250,000. Additionally, [Reynolds] was a one-third
22        beneficiary of the Survivor’s Trust, along with his
          sisters, entitled to receive $100,000 per year for ten
23        years.
24   Id. at 70.      However, the assets in the Survivor’s Trust were
25   interests in undeveloped real property that did not generate any
26   income.   Id.     No income distributions were expected from any of
27   the trusts.
28        Reynolds’ father passed away on March 3, 2009.      Reynolds,

                                        -15-
 1   apparently unaware of the trusts or that he was a beneficiary of
 2   the trusts, filed a chapter 7 bankruptcy petition one day later
 3   on March 4, 2009.   Reynolds’ interests in the trusts consequently
 4   were either vested on the petition date or shortly thereafter.
 5        On April 28, 2009, one of the trustees of the Family Trust
 6   and the Survivor’s Trust, filed an adversary proceeding seeking a
 7   declaratory judgment to determine whether and to what extent the
 8   bankruptcy estate held an interest in the trusts.     Id.   The
 9   trusts both included spendthrift trust provisions to protect
10   their beneficiaries.   On January 14, 2010, Reynolds filed a
11   motion for partial summary judgment in the adversary proceeding,
12   requesting a declaration that “pursuant to [C.P.C.] §§ 15300 et
13   seq. . . ., particularly § 15306.5, a maximum 25% of a
14   beneficiary’s interest in a spendthrift trust is property of a
15   bankruptcy estate.”    Accordingly, Reynolds sought a determination
16   that the estate and his trustee could reach no more than 25% of
17   his interests in the Family Trust and the Survivor’s Trust.       Id.
18   The trustee opposed the motion, acknowledging that C.P.C.
19   § 15306.5 capped the estates’s potential recovery at 25% of the
20   beneficiary’s interest in a spendthrift trust, but argued that
21   distributions of principal from such trusts are not protected
22   under C.P.C. § 15301(b).   At the hearing on the motion for
23   partial summary judgment, the bankruptcy court ruled against the
24   trustee, interpreting the California Probate Code as allowing as
25   an estate asset “a maximum of 25% of a debtor’s interest in a
26   spendthrift trust, less any amount the debtor needed for his
27   support or support of his dependents.”   Id. at 71.
28        On appeal, after discussing principles of statutory

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 1   construction, this Panel analyzed the relevant provisions of the
 2   California Probate Code, C.P.C. §§ 15300-15307.      See id. at 72-
 3   77.   Citing Neuton, this Panel concluded that under § 15306.5,
 4   the estate could claim up to 25% of the debtor beneficiary’s
 5   interest in a spendthrift trust.
 6         “The relevance of § 15306.5 is that it removes 25% of
           the debtor’s interest in the trust from traditional
 7         spendthrift status.” [In re Neuton, 922 F.2d at 1383.]
           Even though a bankruptcy trustee may reach 25% of what
 8         the debtor/beneficiary is entitled to receive, that
           amount may be reduced by whatever amount the court
 9         determines is necessary for the beneficiary’s (and his
           dependents’) support. [C.P.C.] § 15306.5(c); In re
10         Neuton, 922 F.2d at 1384.
11   In re Reynolds, 479 B.R. at 75.     The Panel further rejected the
12   trustee’s argument that C.P.C. § 15307 gave the trustee a means
13   beyond the 25% limitation of C.P.C. § 15306.5 to reach any amount
14   to which the debtor/beneficiary of a spendthrift trust was
15   entitled in excess of what he needed for education and support.
16   “[T]hat reading is inconsistent with § 15306.5, which limits a
17   money judgment creditor to 25% of the beneficiary’s interest in a
18   spendthrift trust.”   Id. at 75-76.      Ultimately, the Panel
19   determined that it was more consistent with legislative intent to
20   interpret C.P.C. § 15307 as applicable only with respect to
21   income distributions from spendthrift trusts, and since Reynolds’
22   potential future “distributions are only from principal and not
23   income, under our interpretation of the [C.P.C.], § 15307 does
24   not apply in this case.”   Id. at 76-77.
25         In reviewing the foregoing authorities, we recognize that in
26   Kim, since the Panel affirmed the bankruptcy court’s initial
27   conclusion that Kim’s retirement funds were fully exempt, its
28   subsequent conclusions regarding the application of C.P.C.

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 1   § 15306.5 could be characterized as dicta.   However, in Reynolds,
 2   this Panel’s conclusion in interpreting the California Probate
 3   Code that under C.P.C. § 15306.5, the bankruptcy estate had an
 4   interest in up to 25% in a debtor/beneficiary’s interest in a
 5   spendthrift trust was central to its decision.
 6        Both Kim and Reynolds are published opinions of this Panel
 7   that have not been reversed or limited on appeal.   Absent a
 8   change in the law, we are bound by our prior precedential
 9   opinions.    Gaughan v. The Edward Dittlof Revocable Trust (In re
10   Costas), 346 B.R. 198, 201 (9th Cir. BAP 2006); Ball v. Payco-
11   Gen’l Am. Credits, Inc. (In re Ball), 185 B.R. 595, 597 (9th Cir.
12   BAP 1995):
13        [W]e have recognized that the BAP was created in part
          to provide a uniform and consistent body of bankruptcy
14        law throughout the Ninth Circuit. In re Proudfoot,
          III, 144 B.R. 876, 878 (9th Cir. BAP 1992). Plainly,
15        compliance with precedent encourages uniformity of
          result.
16
17        The Debtors assert that Ms. Hernandez’s entire interest in
18   the Trust should be excluded from the estate based on an
19   elaborate statutory construction argument focusing on C.P.C.
20   § 15306.5(a).   They argue that the California Supreme Court would
21   never apply the terms “payments to which the beneficiary is
22   entitled under the trust instrument” to a contingent future
23   interest in principal of a spendthrift trust.    We are not
24   convinced.   If the California Supreme Court had issued a decision
25   consistent with the Debtors’ position, that is something we could
26   (and would) consider.   However, the California Supreme Court has
27   issued no such decision, and in the absence of such a definitive
28   opinion from the California Supreme Court, we are bound by the

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 1   line of authority running from Neuton through Kim and Reynolds
 2   interpreting C.P.C. § 15306.5 as allowing the bankruptcy estate
 3   of a contingent future trust beneficiary debtor to claim up to
 4   25% of the debtor’s interest in a California spendthrift trust.
 5   Based on that line of authority, we find no error in the
 6   bankruptcy court’s decisions to sustain the Objection and deny
 7   the Motion for Amended Findings.      What, if anything, the Trustee
 8   can collect from the Trust for the benefit of the Debtors’ estate
 9   is an unresolved matter that is left for determination in future
10   proceedings.
11                              CONCLUSION
12        For the foregoing reasons, we AFFIRM both orders of the
13   bankruptcy court.
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