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Wednesday, March 13, 2013

How Nevada AB 223 May Protect Your Estate

Existing law allows a judgment creditor to obtain a writ of execution, attachment or garnishment to levy on the property of a judgment debtor or defendant in certain circumstances (NRS 21 and 31). What this means in laymen’s terms is that if you are sued, and the creditor wins, they have the right to collect on that judgment by taking certain property (real property and money held in bank accounts) and even garnishing wages. Nevada provides some protection, however: certain property is exempt from execution and therefore cannot be the subject of such a writ. (NRS 21.090)

This new law, which applies to civil actions, provides that a certain amount of money held in apersonal bank account that is “likely to be exempt from execution” is not subject to a writ of execution or garnishment except in certain circumstances; it provides a procedure to execute on property held in a safe-deposit box; it revises the procedure for claiming an exemption from execution on certain property; and makes various other changes to provisions governing writs of execution, attachment and garnishment.

Specifically, Section 3 of this Bill provides that $2,000 (or the entire amount in the account, whichever is more) held in the personal bank account of a judgment debtor which is likely to be exempt from execution is not subject to a writ of execution or garnishment and must remain accessible to the judgment debtor except in certain circumstances. Monies that are deemed “likely to be exempt from execution” are defined as Social Security Benefits, Veterans’ Benefits, Federal Retirement Benefits and specific types of annuities and all other benefits protected by Federal Law. Section 3 further provides immunity from liability to a bank which makes an incorrect determination concerning whether money is subject to execution. Section 4 of the Bill delineates that if a debtor has accounts with multiple institutions, the writ may attach to all money in the various accounts, and then the debtor may claim any exemption that may apply.

Section 5 of the Bill provides the method of execution of property held in a safe deposit box. It further goes on to revise the form for the writ of execution to include notice to banks of whether the judgment is for support of a person (child or spousal support).

Section 7 of the Bill provides additional exemptions from execution provided by Nevada law (NRS 21.090), such as proceeds received from a private disability insurance plan, money in a trust fund for funeral or burial services, unemployment benefits, PERS benefits, money paid for vocational rehabilitation, and public assistance benefits.

Finally, the Bill revises the procedures for claiming an exemption from execution, and for objecting to such a claim of exemption, such as various forms for writ of execution, attachment, garnishment and notice requirements.

This new law further bolsters Nevada’s already generous stance on asset protection. In addition to generous homestead protection ($550,000), non-ERISA retirement protection ($500,000), and the Nevada Spendthrift Trust statute, Nevada has stepped forward to protect its citizens as they attempt to rebuild in one of the worst economic environments in modern history.

 

-Tiffany N. Ballenger, Esq.


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