S T A T E O F N E W Y O R K ________________________________________________________________________ 7007--B Cal. No. 846 I N S E N A T E April 16, 1998 ___________ Introduced by Sen. GOODMAN -- read twice and ordered printed, and when printed to be committed to the Committee on Codes -- reported favora- bly from said committee, ordered to first and second report, ordered to a third reading, amended and ordered reprinted, retaining its place in the order of third reading -- again amended and ordered reprinted, retaining its place in the order of third reading AN ACT to amend the civil practice law and rules, in relation to the personal property exempt from application to the satisfaction of money judgments; the estates, powers and trusts law, in relation to when a disposition in trust for creator are void as against creditors; and the debtor and creditor law, in relation to permissible exemptions in bankruptcy The People of the State of New York, represented in Senate and Assem- ______________________________________________________________________ bly, do enact as follows: _________________________ 1 Section 1. Paragraph 2 of subdivision (c) of section 5205 of the civil 2 practice law and rules, as amended by chapter 93 of the laws of 1995, is 3 amended to read as follows: 4 2. For purposes of this subdivision, all trusts, custodial accounts, 5 annuities, insurance contracts, monies, assets or interests established 6 as part of, and all payments from, either any trust or plan, which is 7 qualified as an individual retirement account under section four hundred 8 eight or section four hundred eight A of the United States Internal ___________________________________ 9 Revenue Code of 1986, as amended, or a Keogh (HR-10), retirement or 10 other plan established by a corporation, which is qualified under 11 section 401 of the United States Internal Revenue Code of 1986, as 12 amended, or created as a result of rollovers from such plans pursuant to 13 sections 402 (a) (5), 403 (a) (4) [or], 408 (d) (3) or 408A of the _ _______ 14 Internal Revenue Code of 1986, as amended, shall be considered a trust 15 which has been created by or which has proceeded from a person other 16 than the judgment debtor, even though such judgment debtor is (i) in the 17 case of an individual retirement account plan, an individual who is the 18 settlor of and depositor to such account plan, or (ii) a self-employed 19 individual, or (iii) a partner of the entity sponsoring the Keogh EXPLANATION--Matter in italics (underscored) is new; matter in brackets _______ [ ] is old law to be omitted. LBD14764-08-8 S. 7007--B 2 1 (HR-10) plan, or (iv) a shareholder of the corporation sponsoring the 2 retirement or other plan. 3  2. Paragraph (b) of section 7-3.1 of the estates, powers and trusts 4 law, as amended by chapter 93 of the laws of 1995, is amended to read as 5 follows: 6 (b) (1) For purposes of paragraph (a) of this section, all trusts, 7 custodial accounts, annuities, insurance contracts, monies, assets or 8 interests established as part of, and all payments from, either an indi- 9 vidual retirement account plan which is qualified under section 408 or __ 10 section 408A of the United States Internal Revenue Code of 1986, as _____________ 11 amended, or a Keogh (HR-10), retirement or other plan established by a 12 corporation, which is qualified under section 401 of the United States 13 Internal Revenue Code of 1986, as amended, shall not be considered a 14 disposition in trust for the use of the creator, even though the creator 15 is (i) in the case of an individual retirement account plan, an individ- 16 ual who is the settlor of and depositor to such account plan, or (ii) a 17 self-employed individual, or (iii) a partner of the entity sponsoring 18 the Keogh (HR-10) plan, or (iv) a shareholder of the corporation spon- 19 soring the retirement or other plan. 20 (2) All trusts, custodial accounts, annuities, insurance contracts, 21 monies, assets, or interests described in subparagraph one of this para- 22 graph shall be conclusively presumed to be spendthrift trusts under this 23 section and the common law of the state of New York for all purposes, 24 including, but not limited to, all cases arising under or related to a 25 case arising under sections one hundred one to thirteen hundred thirty 26 of title eleven of the United States Bankruptcy Code, as amended. 27 (3) This section shall not impair any rights an individual has under a 28 qualified domestic relations order as that term is defined in section 29 414(p) of the United States Internal Revenue Code of 1986, as amended. 30 (4) Additions to an asset described in subparagraph one of this para- 31 graph shall not be exempt from application to the satisfaction of a 32 money judgment if (i) made after the date that is ninety days before the 33 interposition of the claim on which such judgment was entered, or (ii) 34 deemed to be fraudulent conveyances under article ten of the debtor and 35 creditor law. 36  3. Subdivision 2 of section 282 of the debtor and creditor law, as 37 amended by chapter 93 of the laws of 1995, is amended to read as 38 follows: 39 2. Bankruptcy exemption for right to receive benefits. The debtor's 40 right to receive or the debtor's interest in: (a) a social security 41 benefit, unemployment compensation or a local public assistance benefit; 42 (b) a veterans' benefit; (c) a disability, illness, or unemployment 43 benefit; (d) alimony, support, or separate maintenance, to the extent 44 reasonably necessary for the support of the debtor and any dependent of 45 the debtor; and (e) all payments under a stock bonus, pension, profit 46 sharing, or similar plan or contract on account of illness, disability, 47 death, age, or length of service unless (i) such plan or contract, 48 except those qualified under section 401 [or], 408 or 408A of the United _ _______ 49 States Internal Revenue Code of 1986, as amended, was established by the 50 debtor or under the auspices of an insider that employed the debtor at 51 the time the debtor's rights under such plan or contract arose, (ii) 52 such plan is on account of age or length of service, and (iii) such plan 53 or contract does not qualify under section four hundred one [a] (a), ___ 54 four hundred three [a] (a), four hundred three [b] (b), four hundred ___ ___ 55 eight, four hundred eight A, four hundred nine or four hundred fifty- _______________________ S. 7007--B 3 1 seven of the Internal Revenue Code of nineteen hundred eighty-six, as 2 amended. 3  4. This act shall take effect immediately and shall be deemed to 4 have been in full force and effect on and after January 1, 1998.