A04591 Summary:

BILL NO    A04591 

SAME AS    No same as 

SPONSOR    Clark

COSPNSR    

MLTSPNSR   

Amd S7-3.1, EPT L

Makes the establishment of trusts which provide for the suspension, termination
or diversion of the trust or beneficial interest in the event that the
beneficiary needs medical, hospital or nursing care void as against public
policy and allows the commissioner of social services to maintain an action to
collect from such trust the beneficial interest and income for payment of
certain expenses.
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A04591 Actions:

BILL NO    A04591 

02/03/2015 referred to judiciary
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A04591 Votes:

There are no votes for this bill in this legislative session.
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A04591 Memo:

BILL NUMBER:A4591

TITLE OF BILL:  An act to amend the estates, powers and trusts law, in
relation  to  establishing  certain  trusts  as void as against public
policy

SUMMARY OF SPECIFIC PROVISIONS:There has been a trend in recent  years
towards the drawing of trusts (usually for the benefit of the settlor)
which place an individual's assets in trust during his or her lifetime
and  pay  the income, and in some cases portions of the principal, but
which provide that if  the  beneficiary  will  need  extended  medical
or-nursing  care then all payments to the beneficiary will cease. This
then makes the beneficiary eligible for Medicaid  and  the  government
does  not have access to any of the beneficiary's income to offset the
cost. This bill would  make  such  diversions  of  income  invalid  as
against  public  policy and allows the Commissioner of Social Services
to reach the income of the trust which would have otherwise been  paid
to the beneficiary.

EFFECTS  OF PRESENT LAW WHICH THIS BILL WOULD ALTER:  Paragraph (b) of
section 7-3.1 of the estates, powers and  trusts  law  is  amended  by
adding a new subparagraph 5.

JUSTIFICATION:  One  of the goals of Medicaid is to ensure that proper
medical and nursing care is provided to those who cannot afford to pay
for it themselves. The legitimate purpose for which most trusts  exist
is  violated  when  trusts  are  used specifically to avoid paying for
medical care. Such a use of trusts places an  unfair  and  unnecessary
financial strain upon an already overburdened Medicaid system. Because
there  are  legitimate  reasons  for  the transfer of assets, however,
especially for the elderly, this bill  does  not  bar  such  transfers
entirely  but does bar the diversion of income that could otherwise be
distributed  upon  application  for  Medicaid.  In  order   to   avoid
constitutional complications, this bill applies only to trusts created
on or after the date of enactment.

PRIOR LEGISLATIVE HISTORY: None

FISCAL  IMPLICATIONS  FOR STATE AND LOCAL GOVERNMENTS:  Future savings
to state and local governments.

EFFECTIVE DATE: Immediately.
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A04591 Text:

                           S T A T E   O F   N E W   Y O R K
       ________________________________________________________________________

                                         4591

                              2015-2016 Regular Sessions

                                 I N  A S S E M B L Y

                                   February 3, 2015
                                      ___________

       Introduced  by M. of A. CLARK -- read once and referred to the Committee
         on Judiciary

       AN ACT to amend the estates, powers  and  trusts  law,  in  relation  to
         establishing certain trusts as void as against public policy

         THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
       BLY, DO ENACT AS FOLLOWS:

    1    Section 1. Legislative intent. The legislature hereby finds that  many
    2  citizens  are  engaging in the creation of trusts containing all or most
    3  of their assets for the purpose of enabling them to qualify for medicaid
    4  in the event of a protracted hospital stay  or  their  entrance  into  a
    5  nursing  home.  While the creation of a trust to manage one's assets has
    6  long been recognized as being a legitimate means of estate planning, the
    7  legislature recognizes and by this  act  establishes,  as  a  matter  of
    8  public policy, that the citizens of this state have an obligation to pay
    9  for  their  own health care when able to do so and that the diversion of
   10  normal payments from the beneficiary of a trust in order to  avoid  that
   11  responsibility violates such public policy.
   12    S  2. Paragraph (b) of section 7-3.1 of the estates, powers and trusts
   13  law is amended by adding a new subparagraph 5 to read as follows:
   14    (5) A DISPOSITION IN TRUST WHICH PROVIDES FOR THE  SUSPENSION,  TERMI-
   15  NATION OR DIVERSION OF THE TRUST OR THE BENEFICIAL INTEREST OF ANY BENE-
   16  FICIARY  OF SUCH TRUST IN THE EVENT THAT SUCH BENEFICIARY SHOULD REQUIRE
   17  OR IS DIAGNOSED AS REQUIRING MEDICAL, HOSPITAL OR NURSING CARE  OR  LONG
   18  TERM  CUSTODIAL,  NURSING  OR  MEDICAL CARE SHALL BE VOID AS AGAINST THE
   19  PUBLIC POLICY OF THE STATE OF NEW YORK. THE COMMISSIONER  OF  HEALTH  IS
   20  HEREBY  AUTHORIZED,  UPON  THE  APPLICATION  OF ANY SUCH BENEFICIARY FOR
   21  MEDICAL BENEFITS, TO MAINTAIN AN ACTION TO COLLECT FROM SUCH  TRUST  THE
   22  BENEFICIAL  INTEREST  OF  SUCH BENEFICIARY, INCLUDING THE INCOME AND ANY
   23  PRINCIPAL AMOUNTS TO WHICH SUCH BENEFICIARY WOULD HAVE BEEN ENTITLED, BY
   24  THE TERMS OF SUCH TRUST BY RIGHT OR IN THE DISCRETION  OF  THE  TRUSTEE,
   25  HAD  SUCH  BENEFICIARY  NOT  REQUIRED  OR  BEEN  DIAGNOSED  AS REQUIRING

        EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                             [ ] is old law to be omitted.
                                                                  LBD08577-01-5
       A. 4591                             2

    1  MEDICAL, HOSPITAL OR NURSING CARE OR LONG  TERM  CUSTODIAL,  NURSING  OR
    2  MEDICAL CARE.
    3    S  3.  This  act  shall take effect immediately and shall apply to all
    4  trusts created or amended on or after such date.
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