Guardianships

February 22, 2011

Contested Will Results in Settlement after Undue Influence Alleged with Dementia Patient

The beneficiaries of the estate of a wealthy Connecticut woman have agreed to settle a dispute over changes made to her Will after she was diagnosed with dementia, Bloomberg News reported.

Sadly, theft from the elderly and other forms of estate fraud are an all-too-common occurrence. A New York City estate planning attorney can assist residents with making estate plans that minimize such risks. In some cases, a loved one may file for Article 81 Guardianship in New York to take over the affairs of a vulnerable or aging loved one.And safeguards in probate court may also offer some protection. In still other cases, contesting a Will in New York may be the best option.

In this case, a trial over the $3.6 million estate was set to begin this month in West Harford. However, the sides have reached an agreement. The 89-year-old art teacher’s fortune was left to several colleges and other beneficiaries. Her husband, an aviation executive, died in 1999 and their only child passed away in 1963.

The dispute centered around two people who were close to her at the time of her death; they were set to inherit about $1.3 million after changes were made to her Will in 2006. The settlement will largely restore the directives of a previous Will. The changes eliminated large donations to several colleges and other beneficiaries, which led to the probate court challenge.

The decedent left $1 million to the University of Hartford to establish a scholarship in her daughter’s name. Jeanne died of meningitis while a freshman at the university. The 2006 Will cut the donation to just $100,000. Other schools that were set to receive money until being cut from the 2006 Will were Columbia University’s Teachers College, New York University and Parsons.

The settlement calls for the University of Harford to get about $900,000 and for the three New York schools to get about $160,000 each. The 2006 Will was completed shortly after doctors diagnosed her with dementia. She was moved to an assisted living facility a month later.

February 17, 2011

New York Estate Fiduciaries and Guardians Must Consider Internet Information and Assets

by Jules M. Haas

New York Executors, Administrators and Guardians have the responsibility of ascertaining, protecting and collecting the assets, documents and other effects of the estate or incapacitated person they are appointed to oversee. The New York Probate Lawyer Blog has previously discussed fiduciary responsibility concerning asset determination and protection.

An interesting aspect in this area of responsibility concerns assets, information and accounts that are internet or web-based. A fairly basic question is what becomes of a website or Facebook account or other internet based information after a person dies or becomes incapacitated. An insightful article by Ken Strutin entitled What Happens to Your Digital Life When You Die? appeared in Law Technology News on January 26, 2011. As noted in the article “the majority of state laws make no specific provisions for information assets such as those stored in the cloud.”

An Article 81 Guardian or a New York Executor faces issues not only with collecting and preserving these internet items, but may need to be able to value them for tax purposes or possibly for disposal by sale. For the most part, the estate settlement process will be in unchartered waters when dealing with such matters. As a New York Guardianship and Probate attorney, I have assisted clients in resolving many different and complex issues regarding asset identification, collection and disposal. Fiduciaries that are appointed by the Court bear a lot of responsibility in resolving the diverse issues they encounter in administering an estate. It is important for them to consider all matters thoroughly and make decisions that avoid Court criticism.

February 4, 2011

New York Guardianship Property Transfers Require Court Approval And Review

by Jules M. Haas

The New York Probate Lawyer Blog has previously discussed numerous aspects concerning the appointment and duties of an Article 81 personal needs and property management Guardian.

Very often the assets of the incapacitated person includes real property such as a home. It may become necessary for the Guardian to sell the home if the incapacitated person no longer can live in a community setting due to illness, or if the maintenance of the home is unaffordable or if the proceeds from the sale are needed for the person’s long term care.

Other considerations may be presented where the home might be transferred to a relative in conjunction with Medicaid or estate planning and thereby preserved for the incapacitated person, as well as family members, to live in.

An interesting situation involving such a transfer arose in the case of White v. Prister, 912 N.Y.S.2d 127 (2nd Dept. 2010). In White, a daughter had been appointed as guardian of the person and property of her mother, Lila. Following the appointment, the daughter moved into the mother’s house and after a few years asked the Court for permission to transfer the title to the house to the daughter/guardian “for Medicaid and estate planning purposes.” The Court approved the transfer and the deed to the house was placed in the daughter’s name.

After Lila died, her great granddaughter, on behalf of Lila’s estate, sought to set aside the deed. The Court refused to undo the transfer and dismissed the great granddaughter’s case finding that the daughter was allowed by the family to live in the house for many years after Lila’s death without any objection. Thus, the equitable concept of “laches” or undue delay prevented the voiding of the deed. The Court found that it would have been inequitable to force the daughter to give up the house at such late date.

January 28, 2011

Guardianship, Special-Needs Trusts In New York Should Be Considered When Caring For Those With Disabilities

by Jules M. Haas

As we begin 2011, we encourage you to take special care in planning for the welfare of a child with special needs. Consulting a New York City guardianship attorney is a great way to bring peace of mind to the issue of caring for a child or adult-child in your absence.

In other cases, a New York Article 81 Guardianship proceeding can assist in caring for an older loved one who is no longer able to manage their affairs.One aspect that is often overlooked is the need to provide for the care of such dependents in your New York estate plans. Leaving an estate to a loved one can prevent them from collecting state or federal aid. Life insurance proceeds can lead to the same unwanted result. Establishing a special-needs trust is one option that will ensure the long-term care of a loved one in your absence.

When a child with disabilities reaches the age of maturity, a parent or loved one may petition for guardianship under Article 17A of the New York Surrogate’s Court Procedure Act. More than 280,000 people in New York are believed to have mental retardation and another 24,000 have cerebral palsy. The New York State Mental Hygiene Law defines mental disability as:

-Attributed to mental retardation, cerebral palsy, epilepsy, neurological impairment, autism or other closely related condition.

-Originates before a person reaches the age of 22 and has continued or is expected to continue indefinitely.

-Constitutes a substantial handicap.

Once such guardianship is established, you will be able to continue to assist an adult child with special needs in whatever capacity is necessary. However, caring for them after your departure will still require sound estate planning, including a special needs trust or a supplemental needs trust. These investment vehicles will permit your estate to go toward the care of a loved one with special needs without jeopardizing government benefits, Medicaid or other assistance.

November 30, 2010

New York Incapacity Under Article 81 of the Mental Hygiene Law Does Not Void All Prior Contracts

by Jules M. Haas

A New York Court can appoint a Guardian of the person or property for an individual who is found to be incapacitated. As previously discussed in the New York Probate Lawyer Blog, Mental Hygiene Law Section 81.29(d) provides, in part, that “the Court may modify, amend, or revoke any previously executed. . . contract, conveyance, or disposition during lifetime or to take effect upon death, made by the incapacitated person prior to the appointment of the guardian . . . .”

While the Court has the power to undo agreements that were unfairly entered into while a person was incapacitated, such power will be exercised by a Court only after a thorough examination of the facts and circumstances in each instance. In JPMorgan v. CV Haedrich, reported in the New York Law Journal on November 3, 2010, the Court had appointed a Guardian for the person and property of Oden and Marie Haedrich in or about 2005. Prior to such appointment in or about 1999 and 2003, the Haedrich’s had taken mortgage loans. Beginning in or about 2008, payments on the mortgage loans stopped and a foreclosure action was commenced. The Guardian then asked the Court to void the mortgage foreclosure on the ground that the Haedrich’s did not have the capacity to enter into these loans.

The Court, however, refused to vacate the foreclosure. Essentially, the Court found that the loans were taken many years prior to the 2005 determination of incapacity. No credible evidence was presented by the Guardian that either Mr. or Mrs. Haedrich were incapacitated when the transactions occurred or that the lender knew of or was notified of any such incapacity.

As shown by the Court in the Haedrich decision, the mere determination of incapacity does not in and of itself overturn or void all past transactions by the incapacitated person. Specific demonstration of incapacity and/or notice at the time of the occurrence that a party is incapacitated is essential for a Court to revoke a transaction.

November 24, 2010

Thanksgiving May Offer Families Time to Discuss Estate Planning Issues

by Jules M. Haas

By some measure, more than half of all adults will die without a will. In some cases, the consequences for those left behind can be quite severe. Proper planning can ensure your estate goes to your loved ones, that you are protected from excess taxation, and that you can enjoy life with the peace of mind that comes with knowing your affairs are in order.

New York City Probate Attorney Jules Martin Haas and the staff at his law office wish each of you a safe and enjoyable Thanksgiving weekend with friends and family. These gatherings may be the perfect opportunity to open a general dialogue with relatives about such planning.These conversations do not have to be morbid. Nor do they need to be prying or invasive. By starting a conversation that includes younger relatives, our older loved ones will feel more comfortable and may be more apt to share. It will become apparent rather quickly whether they have done the proper planning, and whether the issue has been on their mind in a way that such a conversation provides the necessary outlet and relief.

At the very least, it can help put a loved one’s wishes on the record in front of the whole family. And it may be the catalyst necessary to prompt more thorough and proper estate planning. Here are some basic issues and talking points.

Intestate Estate: This is what happens to an estate without a will. It is distributed by probate court in accordance with state law, which means your estate will pass to your spouse and/or other close relatives in outward concentric circles (children, parents, siblings, etc.) The drawbacks are many and include an inability to choose heirs or to divide your estate in a manner of your choosing. Those omitted from an estate typically include step-children, former spouses, friends or domestic partners.

Trusts and Living Trusts: Trusts are not just for the rich and famous. Establishing a trust may allow your estate to bypass the probate court process. If your Will is probated it will become a public record for all to see. Establishing a trust may also have certain tax advantages.

Powers of Attorney: Powers of Attorney can serve a purpose but can also be ripe for abuse and are best narrowly tailored for a specific circumstance.

Living Will: Advanced Directives, Health Care Proxies and other similar documents allow you to make your wishes known and designate a person to carry them out in the event that you become incapacitated.

Guardianship: May be established to assist a person with managing their personal and/or financial affairs.

Special Needs Trust: Can be established to care for a loved one with special needs after your passing. Establishing such a trust can be critical to ensuring that an inheritance does not disqualify them from receiving government health care or other assistance to which they are entitled.

November 9, 2010

Government Calls into Question New York Probate Oversight of Guardianship Matters

by Jules M. Haas

The U.S. Government Accountability Office reported that probate courts are not doing enough to protect vulnerable older adults against exploitation by guardians appointed to look after their health and finances.

Experienced New York City probate attorneys are frequently called to help establish Article 81 guardianship over an adult who cannot handle his or her own affairs. In many cases, such formal guardianship arrangements are preferable to powers of attorney or other less formal ways of acting on a person’s behalf, which frequently fall outside a court’s review and can be more ripe for abuse.However, this review found that many court systems are also not doing enough to protect the rights even of those placed under formal guardianship. In such cases, it becomes even more important to have an experienced New York City guardianship attorney who understands the system and can make sure your rights are protected on both sides of the guardianship arrangement.

The GAO review found substantial issues in 45 states from 1990 to 2010. Some $5.4 million was illegally obtained from 158 incapacitated victims, usually seniors. In other cases, physical abuse or neglect was prevalent. In other cases, an inappropriate guardian — including those with criminal records — was permitted to be appointed.

The government watchdog found that the New York process in particular was flawed after it tested four states by submitting fictitious guardianship information. Those states were Illinois, Nevada, New York and North Carolina. The GAO used applications with bad credit and false social security numbers but nevertheless passed the certification process. It noted that individuals under financial strain were more likely to engage in theft and people with criminal histories could easily conceal them by submitting false social security numbers.

The GAO said the results raised questions about the effectiveness of the certification program in New York and the other states tested.

Whichever side of the guardianship case you are on, whether you are seeking guardianship, challenging guardianship, or have been appointed guardian and are defending your actions, consulting with an experienced guardianship attorney in New York is critical to protecting your rights throughout the guardianship process.

November 4, 2010

New York Guardianship Court Evaluator Report Can Support Finding of Incapacity

by Jules M. Haas

The New York Mental Hygiene Law provides for the appointment of a Guardian for and individual’s property management and personal needs. Article 81 of the statute requires that a Court find clear and convincing evidence to determine that a person is incapacitated. Mental Hygiene Law Section 81.12.

As discussed on our New York Probate Blog, there are numerous participants in a Guardianship proceeding, including the petitioner, the Alleged Incapacitated Person (AIP), the Court Evaluator and sometimes a Court appointed attorney representing the interests of the AIP. Among these persons, the Court Evaluator always plays an essential role. He or she provides the Court with independent information concerning such issues as the need for a Guardian and the AIP’s capacity, the appropriateness of the proposed Guardian, the nature and extent of the AIP’s property and the powers that the Guardian should possess. In some instances, the investigation by the Court Evaluator and information provided by the Court Evaluator’s report may constitute the major basis for the Court’s ultimate decision as to capacity and Guardianship appointment.

Such was the case in Matter of Incorporated Village of Patchogue v. Zahnd, NYLJ March 12, 2010 at 29 (Col. 1) (Supreme Court, Suffolk County 2010). In Zahnd, the attorney for the AIP asked the Court to dismiss the Guardianship Proceeding on the ground that the petitioner had failed to present “clear and convincing evidence” that the AIP was incapacitated.

The Court had appointed the New York State Mental Hygiene Legal Service as Court Evaluator. Over the objection of the AIP’s attorney, the Court determined that it would allow the Court Evaluator to present its report and testify before deciding the motion to dismiss. Essentially, the Court found that the Court Evaluator’s report and testimony was essential to a full determination of incapacity and such submission was in accordance with the Mental Hygiene Law. Thus, based upon the proof provided by the petitioner and the information supplied by the Court Evaluator, the Court denied the application to dismiss the Article 81 proceeding.

Guardianship proceedings can be very complex and involve numerous issues. Professional guidance and analysis is usually essential for the protection of anyone involved in these proceedings.

October 26, 2010

Incompetancy May Not Prevent the Transfer of a Deed In A Foreclosure

by Jules M. Haas

Article 81 of the Mental Hygiene Law provides for the appointment of a Guardian for the personal needs and property management of a person who is found to be incapacitated. Guardianship proceedings are typically commenced by close relatives and friends who desire to protect the interests of a person who is at risk and cannot adequately handle their own affairs.

The personal and property interests of incapacitated persons are varied and concern such issues as the payment of debts and obligations and securing assets such as homes and other real property through property management and even Court proceedings. Recently, the Supreme Court in Richmond County was required to decide a case where a person for whom the Court had appointed a Temporary Guardian had lost her home through a foreclosure.

The case of U.S. Bank, N.A. v. Bernhardt, 28 Misc3d (1234(A), (August 10, 2010),
was decided by the Honorable Anthony Giacobbe. Initially, the Court-appointed Temporary Guardian asked the Court to vacate the default judgment of foreclosure on the grounds that the alleged incapacitated person was not properly served with the Summons and Complaint. Following a hearing the Court determined that service was not proper and vacated the default judgment of foreclosure.

However, since the property had already been sold to a third party at the foreclosure sale, the Court was next faced with the issue as to whether the Court should allow title to the property to remain in the new owner or should revert back to the alleged incapacitated person. After weighing many factors including: (i) the good faith of the purchaser; (ii) that neither the bank nor the purchaser was aware of the homeowner’s alleged incapacity; (iii) the lack of evidence that the homeowner was incapacitated when the foreclosure action occurred; and (iv) that the homeowner was in default under the mortgage and failed to demonstrate any ability to pay the mortgage arrears, the Court decided that it would not set aside the foreclosure sale. It, therefore, allowed the purchaser who obtained title through the foreclosure sale to remain as the owner of the property.

The Bernhardt case is a striking example of unfortunate consequences that may occur where a person is possibly unable to handle or safeguard their affairs and legal proceedings or other conditions result in harm or damage to their property or personal interests. It is important to consider the benefits of a New York Guardianship Proceeding and consult with an attorney experienced in these matters.

October 12, 2010

New York Guardianship Law Provides For Reasonable Compensation of the Guardian

by Jules M. Haas

New York Guardianship law, as set forth in Article 81 of the Mental Hygiene Law, contains many provisions delineating such matters as procedural requirements and Guardianship powers. Among these many items is an important section concerning Compensation of Guardian. Section 81.28 of the Mental Hygiene Law provides, in part, that “The Court shall establish, and may from time to time modify, a plan for the reasonable compensation of the guardian or guardians.” Such compensation is usually paid from the Incapacitated Person’s assets.

While the statutory language leaves the compensation issue open to determination in each Guardianship case, the Courts typically refer to the statutory commission provisions for Trustees, Executors and Administrators contained in the New York Surrogate’s Court Procedure Act for a basic standard in calculating and awarding Guardian’s compensation. For example, Section 2307 of the Surrogate’s Court Procedure Act provides the following basic schedule for the award of Executor’s and Administrator’s Commissions:

(a) For receiving and paying out all sums of money not exceeding $100,000 at the rate of 5 percent.
(b) For receiving and paying out any additional sums not exceeding $200,000 at the rate of 4 percent.
(c) For receiving and paying out any additional sums not exceeding $700,000 at the rate of 3 percent.
(d) For receiving and paying out any additional sums not exceeding $4,000,000 at the rate of 2 ½ percent.
(e) For receiving and paying out all sums above $5,000,000 at the rate of 2 percent.

Section 81.28 allows the Court in its discretion to modify a Guardian’s compensation despite the generally accepted parameters and, in appropriate cases, to deny the Guardian payment of fees, particularly where the Court finds that the Guardian did not satisfactorily perform his or her fiduciary duties. Such was the case in In Re Conners, 881 NYS2nd 613 (Supreme Court Kings County 2009), where Judge Betsy Barros, denied compensation to the attorney/Guardian, stating in part:

In this matter, the guardian failed to preserve his
ward’s assets, failed to preserve her trust, failed to
file an initial report, filed his bond some five months
after the order and judgment was entered, and failed to
obtain his commission. When the windfall of executor
failure to preserve his ward’s trust, is coupled with the
trustee commissions already obtained, this Court finds
that yet a third commission to Mr. Connors would be an
unjustified reward for his services as guardian.

As pointed out by the Court, a Guardian owes an individual duty of loyalty to the Incapacitated Person and should not be compensated if this fiduciary duty is breached.

Interestingly, the issue of Guardianship compensation may arise when a Guardianship petition is dismissed after an appeal following the appointment of a Guardian. In such situations, the Court must determine which party is responsible to pay the Guardian for the services rendered prior to the dismissal. If the Court finds that the Guardianship petition was not brought in good faith, it may require the petitioner to pay the Guardian’s compensation. For example, in Matter of Isadora, 773 NYS2d 96 (AD2d 2004), the Appellate Division determined that the lower Court should not have revoked a power of attorney and health care proxy and appointed a Guardian. In reversing the Judgment, the Court directed that the Guardian’s compensation be paid by the petitioner.