CPLR § 5205(c)(2)&(5)

CPLR § 5205 Personal property exempt from application to the satisfaction of money judgments

Trust exemption

Memmo v Perez, 2009 NY Slip Op 04710 (App. Div., 1st, 2009)

Order, Supreme Court, New York County (Saralee Evans, J.), entered
February 20, 2009, which, in an action for divorce, inter alia,
directed plaintiff to satisfy the charging lien of his former attorneys
(MSAR) "from the retirement accounts retained by or transferred to
Plaintiff" pursuant to the settlement in the divorce action,
unanimously modified, on the law, to delete the words "retained by or,"
and otherwise affirmed, without costs. Appeal from paper, denominated
decision and order, which granted MSAR's motion seeking, inter alia,
the above relief and directed settlement of an order, unanimously
dismissed, without costs.

MSAR's charging lien came about not by virtue of Judiciary Law § 475, but rather a stipulation, so ordered by the court, in which plaintiff agreed that MSAR "shall have a charging lien
against plaintiff and plaintiff's share of equitable distribution, if
any, in the amount of $70,000." Accordingly, plaintiff will not be
heard to argue that because MSAR's efforts did not create a "new fund"
greater than the value of interests already held by plaintiff, MSAR
does not have a valid charging lien (see Miller v Kassatly, 216 AS2d 260 [1995]; Resnick v Resnick, 24 AD3d 238
[2005]). Nor is the stipulation rendered unenforceable by CPLR
5205(c)(2), exempting personal retirement accounts from application to
the satisfaction of money judgments. First, the transfer of assets from
defendant's IRA account to plaintiff's IRA account pursuant to the
settlement in the divorce action admittedly took place within 90 days
of plaintiff's stipulation to MSAR's lien (CPLR 5205[c][5][i]). Second,
because the matrimonial settlement agreement left plaintiff with no
immediate liquid assets to which MSAR's lien could attach, the court
providently exercised its discretion to look behind that settlement to
determine if plaintiff had used all liquid assets to which he had a
claim to defray obligations other than the lien (see Haser v Haser,
271 AD2d 253 [2000]). However, the directive that payment be made of
out of funds "retained by" plaintiff in retirement accounts is
incorrect, since any funds originally held by plaintiff in his name
would be [*2]exempt from judgment under CPLR 5205(c)(2). In accordance with CPLR 5205(c)(5)(i), only the funds
transferred into plaintiff's IRA account from defendant's IRA account
may be used to satisfy MSAR's lien.

The bold is mine

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