|SAME AS||No Same As|
|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.|
|02/03/2015||referred to judiciary|
|01/06/2016||referred to judiciary|
|03/03/2016||enacting clause stricken|
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NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A4591 SPONSOR: Clark
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 benefi- ciary.   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 appli- cation for Medicaid. In order to avoid constitutional complications, this bill applies only to trusts created on or after the date of enact- ment.   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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STATE OF NEW YORK ________________________________________________________________________ 4591 2015-2016 Regular Sessions IN ASSEMBLY 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 § 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. LBD08577-01-5A. 4591 2 1 medical, hospital or nursing care or long term custodial, nursing or 2 medical care. 3 § 3. This act shall take effect immediately and shall apply to all 4 trusts created or amended on or after such date.