Sylvia Fishbein and her husband created the Fishbein Revocable Trust in 1994. In 2005, following Mr. Fishbein’s death, Mrs. Fishbein executed a pour-over will, an advance directive naming her stepdaughter Leslie as her healthcare representative, and a power of attorney naming her nephew Eugene as her agent. In 2011, Mrs. Fishbein fractured her hip and thereafter became incapacitated. In 2012, she purportedly executed a new advance directive naming Eugene as her healthcare representative. 

Thereafter, Mrs. Fishbein’s stepdaughter Leslie brought a guardianship action, seeking (1) to be appointed as Mrs. Fishbein’s guardian (2) to revoke the 2005 power of attorney naming Mrs. Fishbein’s nephew Eugene as her agent; (3) to invalidate the 2012 advance directive naming Eugene as healthcare representative; and (4) to direct Eugene to provide an accounting. The second action, also filed by Leslie, sought to remove Eugene as co-trustee and appoint Leslie as trustee of the trust. The actions were consolidated.

Following a bench trial, Hon. Frank M. Ciuffani, P.J.Ch. adjudicated Mrs. Fishbein an incapacitated person; appointed an independent “professional guardian” for her person and property; revoked the 2005 power of attorney; invalidated the 2012 advance directive; ordered Eugene to provide an accounting; removed Eugene as co-successor trustee of the trust; and imposed a constructive trust on assets Eugene transferred to himself.

Eugene appealed, claiming, inter alia, that the 2005 power of attorney under which he had operated allowed him to “take action that would lead to Medicaid eligibility” for Mrs. Fishbein, to choose what charities should receive her funds, and to revoke the health care proxy.

On appeal before Judges Fisher, Espinosa and Rothstadt, Judge Ciuffani’s decision was affirmed.

The Appellate Division noted that, under New Jersey statute, an agent owes a fiduciary obligation “to the principal, and to the guardian of the property of the principal if the principal has been adjudicated an incapacitated person, to act within the powers delegated by the power of attorney and solely for the benefit of the principal.” (Quoting N.J.S.A. 46:2B-8.13(a).) Accordingly, Eugene’s authority under the power of attorney could be exercised solely for Mrs. Fishbein’s benefit, and Medicaid planning that might have been conducted by Eugene would be permissible only if it satisfied all five criteria set forth in In re Keri, 181 N.J. 50, 59 (2004).  In addition, the distributions by Eugene were governed by the direction given under Mrs. Fishbein’s power of attorney to make distributions to those she would have favored. Eugene’s distributions, which left Mrs. Fishbein without funds for her own needs and benefitted Eugene and charities with which he had a personal connection, failed to satisfy those criteria. Moreover, Eugene’s authority as agent did not give him authority to remove Leslie as Mrs. Fishbein’s healthcare agent.

The Appellate Division also affirmed Judge Ciuffani’s decision to remove Eugene as agent under the power of attorney, despite Eugene’s argument that to do so required a finding of dishonesty or bad faith. As the appellate court noted, there was ample evidence to permit the court to remove Eugene pursuant to N.J.S.A. 3B:14-21(c), which permits a court to remove a fiduciary who “misapplies any part of the estate for which the fiduciary is responsible, or abuses the trust and confidence reposed in the fiduciary.”

Finally, the Appellate Division dismissed Eugene’s claim that he was entitled to an award of counsel fees because this was a guardianship action, noting that R. 4:86-4(e) “permits but does not require” such an award.

A copy of In re Fishbein can be found here – Matter of Fishbein

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