CPLR § 5205

CPLR 5205(j)(2)

Country Bank v Broderick, 2014 NY Slip Op 05621 [2nd Dept. 2014]

The Supreme Court providently exercised its discretion in granting the plaintiff's motion pursuant to CPLR 5240 for a determination that the funds sought to be levied upon—college savings accounts established under the laws of the State of New Hampshire (see NH Rev Stat Ann, ch 195-H)—are not exempt from levy in connection with the satisfaction of an underlying Connecticut money judgment that was docketed in New York pursuant to CPLR 5402.

The parties do not dispute that the protection from creditors afforded by CPLR 5205(j)(2) to college tuition savings program accounts defined in 26 USC § 529 (hereinafter 529 savings plans) does not apply where, as here, the accounts are not qualified college savings program accounts established pursuant to the New York State College Choice Tuition Saving Program, as set forth in Education Law article 14-A. The Supreme Court correctly concluded that the distinction made in CPLR 5205(j) between 529 savings plans established under the laws of New York, and those established in other states, or under the laws of other states, does not violate the equal protection clause of the United States Constitution. Since the classification "is not based on an inherently suspect characteristic and does not impermissibly interfere with the exercise of a fundamental right, it need only rationally further a legitimate state interest to be upheld as constitutional" (Affronti v Crosson, 95 NY2d 713, 718-719; see Nordlinger v Hahn, 505 US 1, 10; New Orleans v Dukes, 427 US 297, 303; Archbishop Walsh High School v Section VI of the N.Y. State Pub. High School Athletic Assn., 88 NY2d 131, 136). Applying this standard of rational basis review, the court properly determined that CPLR 5205(j) was not unconstitutional, as the disparate treatment is not " so unrelated to the achievement of any combination of legitimate purposes'" as to be irrational (Affronti v Crosson, 95 NY2d at 719, quoting Kimel v Florida Bd. of Regents, 28 US 62, 84).

Contrary to the defendant's contention, the statute is not antithetical to the public policy of the State of New York, and "the choice between conflicting policy values is best made by the Legislature" (Anonymous v Bureau of Professional Med. Conduct/State Bd. for Professional Med. Conduct, 2 NY3d 663, 669 [internal quotation marks omitted]).

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