N.Y. LIE Law § 72

§ 72. Diversion of trust funds. 1. Any transaction by which any trust\nasset is paid, transferred or applied for any purpose other than a\npurpose of the trust as stated in subdivision one or subdivision two of\nsection seventy-one, before payment or discharge of all trust claims\nwith respect to the trust, is a diversion of trust assets, whether or\nnot there are trust claims in existence at the time of the transaction,\nand if the diversion occurs by the voluntary act of the trustee or by\nhis consent such act or consent is a breach of trust.\n Nothing in this article affects the rights of a holder in due course\nof a negotiable instrument or of a purchaser in good faith for value and\nwithout notice that a transfer to him is a diversion of trust assets.\n 2. Trust assets shall not be levied upon or subject to a restraining\nnotice issued pursuant to section fifty-two hundred twenty-two of the\ncivil practice law and rules as the individual property of the trustee.\n 3. In any action or proceeding in which it is sought to apply trust\nassets for a purpose other than a purpose of the trust as stated in\nsubdivision one or subdivision two of section seventy-one\n (a) it shall be the duty of the trustee, if he is a party, to defend\nthe trust against such application, and if he knows of the action or\nproceeding but is not a party, to make application for intervention\ntherein for the purpose of defending the trust;\n (b) any beneficiary of the trust having a trust claim may intervene in\nthe action or proceeding to defend the trust against such application.\n