(The following blog post is adapted from a summary of this case on the ElderLawAnswers website. Mr. Vanarelli is a founding member of ElderLawAnswers.)
A New York appeals court ruled that a lower court erred in ordering the trustee of a special needs trust (SNT) to personally pay various fees and costs associated with the appointment of a guardian for the beneficiary’s property. In re James H. (N.Y. App. Div., 3d, No. 526706, Jan. 10, 2019).
In 2015, the Mental Hygiene Legal Service petitioned the court to appoint a guardian of property for James H., an SNT beneficiary. The petition alleged that James had serious medical and psychiatric disabilities and had been unable to pay for some of his basic needs, including medicine. James’ brother, John H., was the sole trustee of the trust and the relationship between the two allegedly was “extremely strained.”
A court-appointed evaluator, Paul Briggs, conducted a lengthy investigation and submitted a report to the court in March 2016. James, John, and all interested parties subsequently agreed to the report and to the appointment of a guardian. In September 2016, the court ordered that Mr. Briggs be paid $18,204 in fees from James’ “financial resources.” Soon thereafter, the guardian wrote the court that James did not have sufficient resources to pay the fee, seeking direction regarding the source of payment for the award. In October 2016, the court ordered that Mr. Briggs’ fee be paid from a 2006 SNT. John, as trustee, moved to vacate that order; Mr. Briggs opposed the motion and sought sanctions against the trustee.
At a subsequent hearing it was determined that James was the beneficiary of at least six different trusts and that the 2006 SNT had not been funded or executed. In July 2017, the court denied the trustee’s motion to vacate the earlier order and imposed sanctions against him personally for “frivolous” conduct. John was ordered to pay $15,000 of Mr. Briggs’ fee plus more than $6,500 in counsel fees. John appealed.
The New York Supreme Court, Appellate Division, Third Department, reversed the court’s order, granted trustee’s motion to vacate and denied Mr. Briggs’ motion for contempt, counsel fees and sanctions. The court found that the lower court’s orders that the trustee pay Mr. Briggs’ fees first from James’ “financial resources” and then from the unfunded, unexecuted 2006 SNT were not “lawful, clear and unequivocal” and cannot serve as a basis for a contempt order. The lower court erred by not vacating the order that referred to the wrong SNT, the court ruled. The court further found that the lower court’s order for sanctions failed to set forth the conduct on which sanctions were based, the reasons why the conduct was frivolous, and the reasons why the amount awarded was appropriate, as required by law.
To see the court’s full opinion, click here – Matter of James H.
For additional information concerning special needs trusts and disability planning, visit:
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ABOUT DONALD D. VANARELLI
Donald D. Vanarelli has been a practicing attorney since 1983 in New Jersey and New York. Don provides legal services in the areas of elder law, estate planning, trust administration, special education, special needs planning and trial advocacy, including probate litigation, will contests, contested guardianships and elder abuse trials.
Don is a Certified Elder Law Attorney, an Accredited Veterans Attorney and a Past Chair of the Elder and Disability Law Section of the New Jersey State Bar Association. Don is a recipient of the Lifetime Achievement Award, the highest honor given by the New Jersey State Bar Association – Elder and Disability Law Section. The Lifetime Achievement Award is bestowed on an attorney with an established history of distinguished service who has made significant contributions in the field of elder and disability law throughout his or her career.
Don is actively involved in trial advocacy on behalf of elderly and disabled citizens. Don represented the plaintiff in a pivotal special needs trust case decided by the New Jersey Supreme Court entitled Saccone v. Police and Firemen’s Retirement System, 219 N.J. 369 (2014). He also represented the plaintiff in a seminal estate planning / guardianship / Medicaid planning case entitled In re Keri, 181 N.J. 50 (2004). Don was also co-counsel representing the plaintiff in Galletta v. Velez, Civil No. 13-532 (D.N.J. June 3, 2014) in which a federal court ruled, for the first time, that a pension from the Department of Veterans Affairs may not be counted as income in determining Medicaid eligibility.
When he’s not working, Don spends his time with his wife, Marion, and his three children, Julianne, Evan and Alex.
