(a) Subject to any limitation provided in the particular exemption, a fund that is exempt remains exempt to the extent that it can be traced into deposit accounts or in the form of cash or its equivalent.
§ 703.080.Exempt Fund
Title 9. Enforcement of Judgments · Division 2 · Chapter 4. Exemptions · Article 1. General Provisions · Enacted 1982 · no amendments on record · Last verified July 28, 2026
In one sentenceSection 703.080 keeps an exempt fund exempt when it's traced into a deposit account or into cash or its equivalent, places the burden of tracing on the person claiming the exemption, and requires tracing a deposit account by the lowest intermediate balance principle unless a better method serves justice under the case's circumstances.
Full Text of § 703.080
(b) The exemption claimant has the burden of tracing an exempt fund.
(c) The tracing of exempt funds in a deposit account shall be by application of the lowest intermediate balance principle unless the exemption claimant or the judgment creditor shows that some other method of tracing would better serve the interests of justice and equity under the circumstances of the case.
Plain-English Summary
Money doesn't lose its exempt character just because it changes form. Subdivision (a) lets an exempt fund stay exempt when the claimant can trace it into a deposit account, cash, or a cash equivalent — subject to whatever dollar limit or other restriction the specific exemption already carries.
Tracing takes work, and subdivision (b) puts that work on the claimant. The claimant has to show the connection between the exempt source and the funds now sitting in the account or in hand.
When the tracing involves a deposit account that holds both exempt and nonexempt money, subdivision (c) picks the default method: the lowest intermediate balance principle, which tracks the lowest balance the account ever held between the deposit of exempt funds and the time of the levy, treating withdrawals as coming from nonexempt money first. Either the claimant or the judgment creditor can argue for a different tracing method if it would better serve justice and equity given the case's circumstances.
Frequently Asked Questions
Does exempt money stay exempt once it's deposited in a bank account?
Yes, to the extent the claimant can trace it into the deposit account, cash, or a cash equivalent, subject to any limit the underlying exemption carries.
Who has to prove the funds trace back to an exempt source?
The exemption claimant carries the burden of tracing under § 703.080(b).
What method is used to trace exempt funds in a deposit account?
The lowest intermediate balance principle, unless the claimant or the judgment creditor shows another method would better serve justice and equity under the circumstances.
Amendment History
Added by Stats. 1982, Ch. 1364, Sec. 2. Operative July 1, 1983, by Sec. 3 of Ch. 1364.
Source & verification. Section text is reproduced verbatim from
the Deering's California Codes Annotated / vLex. Enacted by the California Legislature.
Last verified July 28, 2026.
· Official source
Also known as: tracing exempt funds california bank accountlowest intermediate balance principle california exemption