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RECENT COURT
DECISIONS
REFORMATION
OF A TESTAMENTARY TRUST PERMITTED TO ESTABLISH
A THIRD PARTY SUPPLEMENTAL NEEDS TRUST
An application was made to
the Nassau County Surrogate to reform a testamentary
trust (the “Trust”) set forth in a codicil
to a will of the decedent (the “Will”).
The Trust was created for a disabled son. The petitioner,
a co-trustee of the Trust, was concerned that the disabled
son’s medical expenses would result in an exhaustion
of the Trust assets prior to the son’s death.
It was not clear from the opinion why the son would
not have been entitled to Medicaid benefits based on
what appeared to be a fully discretionary third party
trust. In any event, the petitioner proposed specific
supplemental needs trust language for inclusion in the
Trust. In response, the Surrogate indicated that a trust
should not be reformed unless the reformation will carry
out the intent of the testator. Based on the language
in the Will, the Surrogate found that the requested
reformation did not alter the decedent’s testamentary
plan and was in the best interests of the beneficiary.
The application was approved.
In the Matter of the Estate
of Goldie Hyman, deceased, 2007 NY Slip Op 50265U;
2007 N.Y. Misc. LEXIS 402, February 16, 2007 (Nassau
County Surr. Ct.).
APPELLATE DIVISION AFFIRMS
ADMINISTRATIVE DECISION THAT ASSETS WERE GIFTED FOR
LESS THAN FAIR MARKET VALUE PRODUCING A PENALTY PERIOD
The petitioner-wife of the
Medicaid applicant was the guardian for the applicant.
In that capacity, she gifted certain of the applicant’s
property to a son resulting in a three month Medicaid
penalty period. The petitioner first asserted that property
of the applicant was transferred for full value. The
appellate court determined that there was substantial
evidence in the record to support a contrary conclusion.
Next, the petitioner argued that the gift was made “exclusively
for a purpose other than to qualify for medical assistance.”
This, too, the court rejected owing to the absence of
sufficient evidence in the record. Finally, the petitioner
argued that somehow spousal refusal would protect the
gift. The court, for good reason, rejected that argument
as well considering it to be inapposite.
In the Matter of Gabrynowicz
v. New York State Dept. of Health, 2007 NY Slip
Op 01116, February 6, 2007 (Appellate Division, Second
Department).
WITH RESPECT TO THE DRAFTING
OF A WILL, WHEN DOES THE STATUTE OF LIMITATIONS BEGIN
TO RUN IN CONNECTION WITH A MALPRACTICE ACTION?
A Will was executed in 2001.
Allegedly, the Will was improperly drafted resulting
in the payment of avoidable taxes. In 2005, a malpractice
action was commenced against the attorney/draftsperson.
Defendant moved to dismiss on the grounds of the running
of the statute of limitations. The court ruled that
an action must be commenced within three years of the
accrual of the action. Citing a Court of Appeals decision
which stated that the “...actionable injury occurs...when
the malpractice was committed, not when the client discovered
it.” The court stated that if the “continuous
representation” argument could have been made,
the statute might have been tolled. Since continuous
representation was not alleged, the dismissal was affirmed
on appeal.
Lynne Iser v. Robert M.
Kerrigan, 2005-09170, 2005-09171 (Index No. 05-375),
2007 NY Slip Op 1522; 2007 N.Y. App Div. LEXIS 2029
(Appellate Division, Second Department).
COURT AUTHORIZES SNT
TRUSTEE TO PURCHASE A SUITABLE RESIDENCE FOR DISABLED
BENEFICIARY
A guardian for a disabled
14 year-old sister applied to the Queens County Supreme
Court for approval to purchase a residence for $428,500
plus a van. The residence was needed because the disabled
14 year-old could not access a bedroom with her wheelchair
and was required to reside in a living room which was
incompatible with using a hospital bed.
The New York City Department
of Human Resources Human Resources (DHR) objected to
the expenditure of funds held in a supplemental needs
trust for the benefit of the 14 year-old for the residence
arguing (1) that the purchase of the residence was not
in the best interests of the disabled person, (2) that
it would substantially reduce trust income, and (3)
that the people really receiving the benefit were family
members living with the disabled beneficiary who were
making no contribution towards the purchase of the residence.
The trust in question had
about $1.3 million yielding an annual income of about
$67,000. By making the expenditure, annual trust income
would be reduced by about $25,000. Furthermore, the
cost to maintain the home would drain trust income by
about $23,000 a year. After a review of the costs and
benefits of the proposed expenditures, the court determined
that DHR’s objections were arbitrary. The court
stated: “It is unfathomable that DHR could believe
that such an expense is unreasonable and unnecessary,
and would require a young girl to live in deplorable
conditions for the mere purpose of keeping the liquid
assets in the Trust.” It is equally clear that
the fact that third parties may benefit indirectly from
the expenditure does not made the expenditure inappropriate
when such an expenditure confers a substantial benefit
on or for the disabled beneficiary.
Matter of Cooper,
2007 N.Y. Misc. LEXIS 391; 237 NYLJ 27 (Index No. 05-934)(Queens
Co. Sup Ct. February 2, 2007).
COURT VACATES A STIPULATION
AGREED TO BY A GAL
A holdover proceeding was
commenced against a blind, mentally ill 69 year-old
tenant incapable of defending his rights. A GAL was
appointed to represent the disabled tenant. The GAL,
without having met with the tenant or having visited
the residence, entered into a stipulation with the plaintiff-landlord
providing for a judgment of possession. The GAL, who
knew that Adult Protective Service was about to commence
an MHL Article 81 proceeding, nevertheless entered into
the stipulation. Appellate Term vacated the stipulation,
stating: “In the absence of any concrete plan
in place to relocate the elderly infirm tenant, the
one-sided stipulation terminating his 30 year rent stabilized
tenancy with a 30-day stay of the warrant of eviction,
should not be permitted to stand, especially considering
that the parties were aware that the commencement of
an Article 81 proceeding was imminent.” Moreover,
the appellate court referred to the court’s continuing
obligation to supervise the GAL’s determinations.
The court was clearly concerned that it appeared that
the GAL took no steps to protect the ward.
BML Realty Group v Jack
Samuels, 2007 NY Slip Op 27073, N.Y. Misc. LEXIS
444, Index No. 570131/06 (Appellate Term, 1st Dept.).
COMPACT UPDATE
S. 116 recently was reported
out of the Senate Aging Committee and referred to the
Senate Finance Committee. The Compact Working Group
is continuing its efforts to educate public officials
in Albany and various provider groups, along with AARP,
regarding the inner workings of the Compact. A lobbying
day is scheduled for May 15 at which time members of
the Compact Working Group will meet with legislators
in an effort to continue to educate policymakers about
the Compact and field questions about how the program
would work in New York state.
Howard S. Krooks and Vincent
J. Russo, Co-Chairs, Compact Working Group | 