S T A T E O F N E W Y O R K
________________________________________________________________________
7530
2019-2020 Regular Sessions
I N A S S E M B L Y
May 8, 2019
___________
Introduced by M. of A. WEPRIN, DINOWITZ -- (at request of the Office of
Court Administration) -- read once and referred to the Committee on
Judiciary
AN ACT to amend the civil practice law and rules, in relation to the
establishment of trusts for lawsuit recoveries paid to children and
the incapacitated
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Section 1206 of the civil practice law and rules, as
amended by chapter 115 of the laws of 1981, the opening paragraph as
amended by chapter 635 of the laws of 1988, subdivision (b) as amended
by chapter 205 of the laws of 1995, subdivision (c) as amended by chap-
ter 464 of the laws of 1995 and as further amended by section 104 of
part A of chapter 62 of the laws of 2011, is amended to read as follows:
§ 1206. Disposition of proceeds of claim of AN infant[, judicially
declared incompetent or conservatee] OR A PERSON FOR WHOM A COURT HAS
APPOINTED A PROPERTY GUARDIAN PURSUANT TO ARTICLE EIGHTY-ONE OF THE
MENTAL HYGIENE LAW OR ARTICLE SEVENTEEN-A OF THE SURROGATE'S COURT
PROCEDURE ACT. (A) Except as provided in [EPTL 7-4.9], SECTION 7-6.5 OF
THE ESTATES, POWERS AND TRUSTS LAW any property to which an infant[,] OR
a person [judicially declared to be incompetent or a conservatee] FOR
WHOM A COURT HAS APPOINTED A PROPERTY GUARDIAN PURSUANT TO ARTICLE
EIGHTY-ONE OF THE MENTAL HYGIENE LAW OR ARTICLE SEVENTEEN-A OF THE
SURROGATE'S COURT PROCEDURE ACT is entitled, after [deducting] DEDUCTION
OF any expenses allowed by the court, shall be distributed to HIS OR HER
PARENT AS NATURAL GUARDIAN, IF HE OR SHE IS STILL AN INFANT AND NO GUAR-
DIAN HAS BEEN APPOINTED, OR TO A GUARDIAN APPOINTED PURSUANT TO RULE
TWELVE HUNDRED TEN OF THIS ARTICLE, OR TO the guardian of his OR HER
property[, the committee of his property or conservator] APPOINTED
PURSUANT TO ARTICLE EIGHTY-ONE OF THE MENTAL HYGIENE LAW OR ARTICLE
SEVENTEEN-A OF THE SURROGATE'S COURT PROCEDURE ACT, OR TO A TRUSTEE OF A
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD11248-01-9
A. 7530 2
TRUST ESTABLISHED WITH THE APPROVAL OF THE COURT. SUCH PARENT, GUARDIAN
OR TRUSTEE SHALL BE REQUIRED BY THE COURT TO HOLD SUCH PROPERTY IN THE
MANNER SET FORTH IN SUBDIVISION (B) OF THIS SECTION, OR IF THE PROPERTY
IS DISTRIBUTED TO A TRUSTEE OF A TRUST THAT IS ESTABLISHED WITH THE
APPROVAL OF THE COURT THAT HAS JURISDICTION OVER THE CLAIM OR OVER THE
GUARDIAN, THEN THE TRUSTEE MAY HOLD AND INVEST THE TRUST PROPERTY AS IS
PROVIDED FOR IN THE TRUST DOCUMENT AND AS IS FURTHER LIMITED HEREIN, to
be held for the use and benefit of such infant[, incompetent, or conser-
vatee] OR PERSON FOR WHOM A COURT HAS APPOINTED A PROPERTY GUARDIAN
PURSUANT TO ARTICLE EIGHTY-ONE OF THE MENTAL HYGIENE LAW OR ARTICLE
SEVENTEEN-A OF THE SURROGATE'S COURT PROCEDURE ACT except that:
[(a)] 1. in the case of an infant who is married to and resides with
an adult spouse, the court may order that the property be distributed to
such adult spouse for the use and benefit of the infant; or
[(b)] 2. if the value of the property does not exceed [ten] TWENTY
thousand dollars the court may order the property distributed to a
person with whom such infant[, incompetent or conservatee] OR PERSON FOR
WHOM A COURT HAS APPOINTED A PROPERTY GUARDIAN resides or who has some
interest in his OR HER welfare to be held for the use and benefit of
such infant[, incompetent or conservatee] OR PERSON FOR WHOM A COURT HAS
APPOINTED A PROPERTY GUARDIAN; or
[(c) the] 3. IF THE VALUE OF THE PROPERTY DOES NOT EXCEED SUCH AMOUNT
AS SHALL BE SPECIFIED IN PARAGRAPH (C) OF SECTION 7-6.7 OF THE ESTATES,
POWERS AND TRUSTS LAW, THE COURT MAY ORDER THE PROPERTY OF THE INFANT
DISTRIBUTED, PURSUANT TO SECTIONS 7-6.7 AND 7-6.9 OF THE ESTATES, POWERS
AND TRUSTS LAW, AS APPROPRIATE, TO A CUSTODIAN DESIGNATED BY THE COURT
AND DEPOSITED IN A NEW YORK UNIFORM TRANSFERS TO MINORS ACT (UTMA)
ACCOUNT.
(B) THE court may [order] DIRECT that [money constituting any part of
the property be] THE PROCEEDS BE:
1. deposited in one or more specified insured banks or trust companies
or savings banks or insured state or federal credit unions or be
invested in one or more specified accounts in insured savings and loan
associations, SUCH AS AN INSURED "SAVINGS CERTIFICATE" OR AN INSURED
"MONEY MARKET" ACCOUNT; or [it may order]
2. INVESTED IN ONE OR MORE INSURED OR GUARANTEED UNITED STATES TREAS-
URY OR MUNICIPAL BILLS, NOTES OR BONDS; OR
3. USED TO PURCHASE AN ANNUITY AND that a structured settlement agree-
ment be executed, which shall include any settlement whose terms contain
provisions for the payment of funds on an installment basis, provided
that with respect to future installment payments, the court may order
that each party liable for such payments shall fund such payments, in an
amount necessary to assure the future payments, in the form of an annui-
ty contract executed by a qualified insurer and approved by the super-
intendent of financial services pursuant to articles fifty-A and fifty-B
of this chapter[. The court may elect that the money be deposited in a
high interest yield account such as an insured "savings certificate" or
an insured "money market" account. The court may further elect to invest
the money in one or more insured or guaranteed United States treasury or
municipal bills, notes or bonds. This money is subject to withdrawal
only upon order of the court, except that no court order shall be
required to pay over to the infant who has attained the age of eighteen
years all moneys so held unless the depository is in receipt of an order
from a court of competent jurisdiction directing it to withhold such
payment beyond the infant's eighteenth birthday. Notwithstanding the
preceding sentence, the ability of an infant who has attained the age of
A. 7530 3
eighteen years to accelerate the receipt of future installment payments
pursuant to a structured settlement agreement shall be governed by the
terms of such agreement. The reference to the age of twenty-one years in
any order made pursuant to this subdivision or its predecessor, prior to
September first, nineteen hundred seventy-four, directing payment to the
infant without further court order when he reaches the age of twenty-one
years, shall be deemed to designate the age of eighteen years; or
(d) the court may order that the property be held for the use and
benefit of such infant, incompetent or conservatee as provided by subdi-
vision (d) of section 1210.]; OR
4. DEPOSITED INTO A SPECIAL NEEDS TRUST, IN COMPLIANCE WITH SECTION
THREE HUNDRED SIXTY-SIX OF THE SOCIAL SERVICES LAW, AS IT MAY BE
AMENDED, AND SECTION 7-1.12 OF THE ESTATES, POWERS AND TRUSTS LAW, AS IT
MAY BE AMENDED, AND WITH THE CONSENT OF THE STATE DEPARTMENT OF SOCIAL
SERVICES, AND THE ORDER SHALL, IN SUCH EVENT, CONTAIN ANY AND ALL
LANGUAGE REQUIRED BY SUCH STATUTES AND ANY REGULATIONS PROMULGATED THER-
EUNDER; OR
5. DEPOSITED INTO A TRUST ACCOUNT AT A BANK OR BROKERAGE FIRM,
PROVIDED THAT THE TRUST AGREEMENT COMPLIES WITH ALL THE APPLICABLE
PROVISIONS OF THIS SECTION.
(C) IF THE FUNDS ARE DEPOSITED PURSUANT TO PARAGRAPH ONE OR TWO OF
SUBDIVISION (B) OF THIS SECTION, THE ORDER SHALL PROVIDE THAT THE FUNDS
ARE SUBJECT TO WITHDRAWAL ONLY UPON A FURTHER ORDER OF THE COURT, EXCEPT
THAT NO COURT ORDER SHALL BE REQUIRED TO PAY OVER TO AN INFANT WHO HAS
ATTAINED THE AGE OF EIGHTEEN YEARS ALL MONEYS SO HELD UNLESS THE DEPOSI-
TORY IS IN RECEIPT OF AN ORDER FROM A COURT OF COMPETENT JURISDICTION
DIRECTING IT TO WITHHOLD SUCH PAYMENT BEYOND THE INFANT'S EIGHTEENTH
BIRTHDAY.
(D) IF THE FUNDS ARE DEPOSITED PURSUANT TO PARAGRAPH THREE OF SUBDIVI-
SION (B) OF THIS SECTION, THE RIGHT OF AN INFANT WHO HAS ATTAINED THE
AGE OF EIGHTEEN YEARS TO ACCELERATE THE RECEIPT OF FUTURE INSTALLMENT
PAYMENTS PURSUANT TO A STRUCTURED SETTLEMENT AGREEMENT SHALL BE GOVERNED
BY THE TERMS OF SUCH AGREEMENT AND SUBJECT TO THE PROVISIONS OF THE
STRUCTURED SETTLEMENT PROTECTION ACT PURSUANT TO TITLE SEVENTEEN OF
ARTICLE FIVE OF THE GENERAL OBLIGATIONS LAW.
(E) THE COURT MAY DIRECT, IN THE ORDER APPROVING THE SETTLEMENT AND
REGARDLESS OF THE NATURE OF THE ACCOUNT IN WHICH THE FUNDS ARE DEPOSIT-
ED, THAT AN APPLICATION SHALL BE BROUGHT BEFORE A COURT OF COMPETENT
JURISDICTION IN THE YEAR PRIOR TO THE INFANT'S REACHING THE AGE OF EIGH-
TEEN TO DETERMINE IF THE INFANT IS INCAPACITATED AT THAT TIME, AND
THEREFORE IN NEED OF A COURT-APPOINTED GUARDIAN OF THE PERSON, A GUARDI-
AN OF THE PROPERTY, OR BOTH.
(F) THE COURT MAY ORDER THAT THE PROPERTY BE HELD BY A TRUSTEE, FOR
THE USE AND BENEFIT OF AN INFANT OR A PERSON FOR WHOM A PROPERTY GUARDI-
AN HAS BEEN APPOINTED, ONLY IF:
1. THE COURT HAS DETERMINED THAT THE TRUSTEE SHALL FILE AN UNDERTAK-
ING, UTILIZING THE ANALYSIS SET FORTH IN SECTION SEVENTEEN HUNDRED EIGHT
OF THE SURROGATE'S COURT PROCEDURE ACT, OR DETERMINED THAT THE UNDERTAK-
ING SHALL BE DISPENSED WITH; AND
2. THE TRUSTEE'S POWERS TO INVEST THE TRUST ASSETS ARE SPECIFIED TO BE
IDENTICAL TO THOSE SET FORTH IN SECTIONS 11-1.1 AND 11-2.1 OF THE
ESTATES, POWERS AND TRUSTS LAW; AND
3. THE COURT HAS APPOINTED A REFEREE TO EXAMINE THE ANNUAL ACCOUNTINGS
OF THE TRUSTEE EACH YEAR AND REPORT TO THE COURT CONCERNING THE USE OF
THE TRUST FUNDS, OR SPECIFIED THE REASON THAT A REFEREE IS NOT APPOINTED
IN THE ORDER; AND
A. 7530 4
4. THE TRUSTEE IS DIRECTED IN THE ORDER TO FILE AN ANNUAL ACCOUNTING
WITH THE COURT, OR WITH ANOTHER COURT HAVING JURISDICTION OVER THE
TRUST, AND TO PROVIDE A COPY TO THE REFEREE OR HIS OR HER SUCCESSOR
REFEREE, AND TO THE APPLICABLE SOCIAL SERVICES AGENCY IF THE TRUST IS A
SPECIAL NEEDS TRUST, CONCERNING THE TRUSTEE'S USE OF THE TRUST PRINCIPAL
AND INCOME IN THE PRECEDING YEAR; AND
5. THE COURT MAY DIRECT, IN A FURTHER ORDER, THAT THE TRUSTEE PAY FROM
TRUST ASSETS A FEE TO THE REFEREE, IN CONNECTION WITH THE REVIEW OF EACH
ANNUAL ACCOUNTING.
(G) IF, AT ANY TIME AFTER THE SETTLEMENT IS APPROVED, A COURT OF
COMPETENT JURISDICTION APPOINTS A GUARDIAN FOR THE INFANT, THE COURT
HAVING JURISDICTION OVER THE GUARDIAN OF THE INFANT SHALL THEREAFTER
HAVE JURISDICTION OVER THE SETTLEMENT FUNDS, IN WHATEVER FORM THEY ARE
HELD.
§ 2. This act shall take effect immediately.