Property Exempt from Execution
When a judgment is entered against you, a creditor will look to enforce it by seizing a debtor’s property. Once a creditor obtains that property, they will sell it to satisfy the debt. That process is referred to as “execution.” Even if a judgment exists, certain types of assets cannot be taken from you because not all property is subject to execution.
What Are Exemptions?
Under Nevada Revised Statute (NRS), a judgment creditor can seize goods, chattels, money, and other personal and real property. This means that a judgment may allow a creditor to garnish personal property, levy bank accounts, put liens on real property, and even initiate wage garnishment.
However, Nevada law explicitly “exempts” specific property from execution. An exemption is money or property that cannot be taken from you by a judgment creditor. In other words, it is protected from execution.
Procedure to Claim Exempt Property
When property is exempt, it doesn’t happen automatically. Unless a debtor takes action within a specified time, a creditor can seize exempt property. Once that property is held, it can be sold, and the proceeds given to the judgment creditor to satisfy the debt.
You must follow a procedure to stop a creditor from executing on exempt assets. The first step is to complete an executed claim of exemption. To correctly fill out the form, you must list the exempt asset and the applicable legal exemption. Depending on the exemption, there may be other required paperwork along with the claim of exemption.
Once a notice of execution or garnishment is served on you, you have 10 days to file a claim of exemption. Service of the claim of exemption must be legally proper under the governing law. This may include serving the claim of exemption with the sheriff, the garnishee, and the judgment creditor. You may be precluded from using an exemption if the claim of exemption isn’t correctly filed with the court clerk or served.
If the creditor fails to file an objection, the sheriff must release the property to the debtor. The sheriff has 9 judicial days to return the money or property.
A creditor has a limited time to properly file an objection. When a creditor files an objection, a hearing will be held to verify whether the property in question is exempt.
During a hearing, the debtor holds the responsibility to prove that the property is exempt. Since a hearing needs to be held within 7 judicial days after a creditor’s objection, it is essential to be prepared. Proof that the property is exempt will depend on the property or money at issue. For example, if a pension fund is the exempt property in questions, then acceptable evidence that the money is exempt may include annual statements from the fund or records from financial institutions. If there is a judgment against you, it’s best to consult with an attorney quickly.
Types of Exemptions Under Nevada Laws
Nevada laws carve out a long list of property exempt from execution.
Below are some examples of exemptions:
- Necessary household goods, furnishings, electronics, clothes, yard equipment, and other personal effects up to $12,000 in value.
- 5% of your disposable earnings or 50 times the minimum wage (currently $362.50 per week), whichever is higher.
- A discretionary beneficial interest even if the trust does not contain a spendthrift clause, provided that the interest has not been distributed. Contingency trust also qualifies provided that the contingency hasn’t yet been satisfied or removed.
- Certain federal and state retirement accounts, including pension plans and some individual retirement accounts, up to $1,000,000 in present value.
- Money, benefits, or privileges growing out of any life insurance.
- A “homestead” exemption up to $605,000 in an individual’s primary residence (home or mobile home). If the property is rented, rent payments are also excluded unless the judgment creditor is the landlord seeking to enforce the lease terms.
- Any vehicle, unless the judgment creditor is the owner of the car.
- Workers Compensation benefits or payments of up to $16,150 are received as compensation for personal injury.
- Social Security benefits, including retirement and survivors’ benefits, supplemental security income benefits, and disability insurance benefits.
- Welfare benefits, public assistance benefits provided through the Department of Health and Human Services.
- Veteran benefits.
- Disability, illness, or unemployment benefits.
The following is not a complete list of exemptions. If you have a judgment, you should consult with an experienced trust and estate attorney at Lee Kiefer & Park.
Attorney Kennedy Lee practices in all aspects of trust and estate law. He views all legal issues from multiple angles (e.g. from litigation to administration point of view) to provide a higher quality of service to our client.