N.Y. EPT Law § 7-3.1 — New York Code / Act EPT / Article 7 / Part 3 / Section 7-3.1
Disposition in trust for creator void as against creditors
Status: in_force

§ 7-3.1 Disposition in trust for creator void as against creditors\n  (a) A disposition in trust for the use of the creator is void as\nagainst the existing or subsequent creditors of the creator.\n  (b) (1) For purposes of paragraph (a) of this section, all trusts,\ncustodial accounts, annuities, insurance contracts, monies, assets or\ninterests established as part of, and all payments from, either an\nindividual retirement account plan which is qualified under section 408\nor section 408A of the United States Internal Revenue Code of 1986, as\namended, or a Keogh (HR-10), retirement or other plan established by a\ncorporation, which is qualified under section 401 of the United States\nInternal Revenue Code of 1986, as amended, shall not be considered a\ndisposition in trust for the use of the creator, even though the creator\nis (i) in the case of an individual retirement account plan, an\nindividual who is the settlor of and depositor to such account plan, or\n(ii) a self-employed individual, or (iii) a partner of the entity\nsponsoring the Keogh (HR-10) plan, or (iv) a shareholder of the\ncorporation sponsoring the retirement or other plan.\n  (2) All trusts, custodial accounts, annuities, insurance contracts,\nmonies, assets, or interests described in subparagraph one of this\nparagraph shall be conclusively presumed to be spendthrift trusts under\nthis section and the common law of the state of New York for all\npurposes, including, but not limited to, all cases arising under or\nrelated to a case arising under sections one hundred one to thirteen\nhundred thirty of title eleven of the United States Bankruptcy Code, as\namended.\n  (3) This section shall not impair any rights an individual has under a\nqualified domestic relations order as that term is defined in section\n414(p) of the United States Internal Revenue Code of 1986, as amended.\n  (4) Additions to an asset described in subparagraph one of this\nparagraph shall not be exempt from application to the satisfaction of a\nmoney judgment if (i) made after the date that is ninety days before the\ninterposition of the claim on which such judgment was entered, or (ii)\ndeemed to be voidable transactions under article ten of the debtor and\ncreditor law.\n  (c) A provision in any trust, other than a testamentary trust or a\ntrust which meets the requirements of subparagraph two of paragraph (b)\nof subdivision two of section three hundred sixty-six of the social\nservices law and of the regulations implementing such clauses, which\nprovides directly or indirectly for the suspension, termination or\ndiversion of the principal, income or beneficial interest of either the\ncreator or the creator's spouse in the event that the creator or\ncreator's spouse should apply for medical assistance or require medical,\nhospital or nursing care or long term custodial, nursing or medical care\nshall be void as against the public policy of the state of New York,\nwithout regard to the irrevocability of the trust or the purpose for\nwhich the trust was created.\n  (d) A disposition in trust shall not be considered to be for the use\nof the creator under paragraph (a) of this section by reason of the\ntrustee's authority to pay trust principal to the creator pursuant to\nsection 7-1.11 of this article. Nor shall a disposition in trust be\nconsidered to be for the use of the creator under paragraph (a) of this\nsection where the trustee is authorized under the trust instrument or\nany other provision of law to pay or reimburse the creator for any tax\non trust income or trust principal that is payable by the creator under\nthe law imposing such tax or to pay any such tax directly to the taxing\nauthorities. No creditor of a trust creator shall be entitled to reach\nany trust property based on the discretionary powers described in this\nparagraph.\n