§ 7-1.12 Supplemental needs trusts established for persons with severe\n and chronic or persistent disabilities\n (a) Definitions: When used in this section, unless otherwise expressly\nstated or unless the context otherwise requires:\n (1) "Developmental disability" means developmental disability as\ndefined in subdivision twenty-two of section 1.03 of the mental hygiene\nlaw.\n (2) "Government benefits or assistance" means any program of benefits\nor assistance which is intended to provide or pay for support,\nmaintenance or health care and which is established or administered, in\nwhole or in part, by any federal, state, county, city or other\ngovernmental entity.\n (3) "Mental illness" means mental illness as defined in subdivision\ntwenty of section 1.03 of the mental hygiene law.\n (4) "Person with a severe and chronic or persistent disability" means\na person (i) with mental illness, developmental disability, or other\nphysical or mental impairment;\n (ii) whose disability is expected to, or does, give rise to a\nlong-term need for specialized health, mental health, developmental\ndisabilities, social or other related services; and\n (iii) who may need to rely on government benefits or assistance.\n (5) "Supplemental needs trust" means a discretionary trust established\nfor the benefit of a person with a severe and chronic or persistent\ndisability (the "beneficiary") which conforms to all of the following\ncriteria:\n (i) The trust document clearly evidences the creator's intent to\nsupplement, not supplant, impair or diminish, government benefits or\nassistance for which the beneficiary may otherwise be eligible or which\nthe beneficiary may be receiving, except as provided in clause (ii) of\nthis subparagraph;\n (ii) The trust document prohibits the trustee from expending or\ndistributing trust assets in any way which may supplant, impair or\ndiminish government benefits or assistance for which the beneficiary may\notherwise be eligible or which the beneficiary may be receiving;\nprovided, however, that the trustee may be authorized to make such\ndistributions to third parties to meet the beneficiary's needs for food,\nclothing, shelter or health care but only if the trustee determines (A)\nthat the beneficiary's basic needs will be better met if such\ndistribution is made, and (B) that it is in the beneficiary's best\ninterests to suffer the consequent effect, if any, on the beneficiary's\neligibility for or receipt of government benefits or assistance;\n (iii) The beneficiary does not have the power to assign, encumber,\ndirect, distribute or authorize distributions from the trust;\n (iv) If an inter vivos trust, the creator of the trust is a person or\nentity other than the beneficiary or the beneficiary's spouse; and\n (v) Notwithstanding subparagraph (iv) of this paragraph, the\nbeneficiary of a supplemental needs trust may be the creator of the\ntrust if such trust meets the requirements of subparagraph two of\nparagraph (b) of subdivision two of section three hundred sixty-six of\nthe social services law and of the regulations implementing such\nclauses. Provided, however, that if the trust is funded with the\nproceeds of retroactive payments made as a result of a court action and\ndue the beneficiary under the federal supplemental security income\nprogram, as established under title XVI of the federal social security\nact, the creation of a supplemental needs trust by the beneficiary under\nthis subparagraph shall not impair nor limit any right under applicable\nlaw of a representative payee to receive reimbursement out of such\nproceeds for expenses incurred on behalf of the beneficiary pending the\ndetermination of the beneficiary's eligibility for such federal\nsupplemental security income program, nor any right under applicable law\nof any state or local governmental entity which provided the beneficiary\nwith interim assistance pending the determination of the beneficiary's\neligib
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