§60-1318. Avoidance of qualified disposition — Extent — Qualified

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A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

person lien rights — Beneficiary rights.

A qualified disposition is avoided only to the extent necessary to satisfy the transferor's debt to the creditor at whose insistence the disposition had been avoided, together with such costs, including attorney fees, as the court may allow. If any qualified disposition is avoided as provided in this section, then:

1. If the court is satisfied that a qualified person has not acted in bad faith in accepting or administering the property that is the subject of the qualified disposition:

a. such qualified person has a first and paramount lien

against the property that is the subject of the

qualified disposition in an amount equal to the entire

cost, including attorney fees, properly incurred by

such qualified person in the defense of the action or

proceedings to avoid the qualified disposition. It is

presumed that such qualified person did not act in bad

faith merely by accepting such property, and

b. the qualified disposition is avoided subject to the

proper fees, costs, preexisting rights, claims, and

interests of such qualified person, and of any

predecessor qualified person that has not acted in bad

faith; and

2. If the court is satisfied that a beneficiary of a trust has not acted in bad faith, the avoidance of the qualified disposition is subject to the right of such beneficiary to retain any distribution made upon the exercise of a trust power or discretion vested in the qualified person or qualified persons of such trust, which power or discretion was properly exercised prior to the creditor's commencement of an action to avoid the qualified disposition. It is presumed that the beneficiary, including a beneficiary who is also a transferor of the trust, did not act in bad faith merely by creating the trust or by accepting a distribution made in accordance with the terms of the trust.

Added by Laws 2024, c. 369, § 36, eff. Nov. 1, 2024.