ZACHARY W. CARTER
Corporation Coun.<;el
THE CITY OF NEW YORK
LAW DEPARTMENT
. 100 CHURCH STREET
NEW YORK, NY 10007
ERIC LEE
Phone: (212) 356-4053
Fax: (212) 356-2509
Email: erlee@law .nyc. gov
November 18, 2016
Hon. John P. Asiello
Chief Clerk and Legal Counsel to the Court
New York State Court of Appeals
20 Eagle Street
Albany, New York 12207-1095
Re: Gaines v. City of New York
APL-2016-000161
Dear Mr. Asiello:
In response to this Court's August 24, 2016 letter inviting
submissions under Rule of Practice 500.11, I submit this letter brief on
behalf of the appellant Department of Social Services of the City of New
York (HRA). Under Rule 500.ll(c)(2), HRA notes its position that the
question presented here warrants full briefing and argument because
the decision below raises a novel issue of public importance under state
and federal law.
HRA appeals from the decision and order of the Appellate
Division, First Department, which affirmed the order of Supreme Courtl
Bronx County holding the Janie Gaines Irrevocable Supplemental
Needs Trust invalid and denying HRA's motion to compel distribution of
the trust remainder to HRA. This Court should reverse.
A supplemental needs trust is a special vehicle for estate planning
authorized under federal and state law. It shields a disabled person's
assets from being counted against eligibility for vital government
benefits like Medicaid. Because the trust preserves Medicaid eligibility
for a disabled person who otherwise would be ineligible, it diverts scarce
resources that could be used to provide benefits to other individuals. To
compensate, Medicaid law requires a disabled person who uses this
trust to make a bargain with the government: (1) the funds held in the
trust may be applied to supplement her care during her lifetime (subject
to certain restrictions), (2) yet will be disregarded in determining her
continuing eligibility for Medicaid, (3) as long as, in exchange, the
government is granted a remainder interest allowing it to offset
Medicaid benefits spent on her behalf with any funds remaining in the
trust at the time of her death.
Since 1990, Janie Gaines received more than $1.3 million in
Medicaid benefits through HRA. In 2010, she petitioned Supreme
Court, Bronx County, to create a supplemental needs trust to receive
funds from a substantial settlement in a tort action against the City of
New York and other defendants. Mter reviewing the terms of the
proposed trust, Supreme Court (Walker, J.) issued an order establishing
the trust, incorporating the trust agreement by reference, appointing
the trustee, and directing the settlement funds to the trust. The court
further directed additional, ministerial steps to implement the trust.
Relying on the order, HRA kept Gaines on Medicaid. Gaines died
several months later.
HRA then asserted its right to the trust remainder to recoup a
portion of the Medicaid benefits spent for Gaines.. Gaines's estate
opposed the motion, asserting that the trust had never come into
~xistence due to an alleged failure of certain formalities, and thus HRA
had no remainder interest. A different Justice of Supreme Court, Bronx
County (Sherman, J .), and a panel of the First Department, accepted
the Estate's contention.
The courts below erred in holding that Gaines's supplemental
needs trust was never established, even though Justice Walker issued
an order-at Gaines's request-doing exactly that. The state and
federal Medicaid statutes expressly allow courts to create these trusts
for disabled individuals. The failure of Gaines's lawyer and the trustee
to comply with Justice Walker's order before her death does not nullify
the trust. Nor is the trust invalid because it did not feature the
2
formalities required by statute for defined lifetime trusts. Court-created
trusts like Gaines's are expressly excluded from having to satisfy those
formalities.
If allowed to stand, the First Department's refusal to recognize the
trust's existence would destabilize this trust device, to the detriment of
both disabled persons and social-services districts such as HRA. The
court's holding would impose additional, unnecessary requirements on
disabled persons who, under Medicaid law, cannot establish a
supplemental needs trust on their own and must ask a court to do so on
their behalf. The court's holding would inject uncertainty into a
mechanism designed to ensure continuity of life-saving benefits, calling
into question the validity of numerous trusts that have been formed by
judicial ruling.
STATEMENT OF THE CASE
A. The Statutory Framework for Supplemental Needs Trusts
1. The bargain offered by the supplemental needs trust
A jointly administered program of the federal and state
governments, Medicaid serves as a vital lifeline for millions of low-
income New Yorkers, including many with severe disabilities. Because
Medicaid eligibility depends in part on a person's assets, a Medicaid
recipient can lose her benefits if her income or assets go above the
statutory limits. I
To preserve eligibility for government programs like Medicaid,
New York courts, starting in 1978, sanctioned the use of "discretionary
trust[s] to supplement the care of severely disabled persons without
jeopardizing the individual's right to government-provided medical
1 As of September 2016, 2.03 million New York City residents are enrolled in
Medicaid. See HRA, HRA Administered Medicaid Enrollees 2012-2016,
https://www1.nyc.gov/assetslhra/downloads/pdf/facts/charts/hra_admin_med_eru·olle
e.pdf (last visited Nov. 18, 2016). The eligibility limits for most New York residents
are tied to the federal poverty level. See Medicaid in New York State,
http://www.health.ny.gov/health_care/medicaidl#income (last visited Nov. 18, 2016).
3
care." Matter of Abraham XX., 11 N.Y.3d 429, 434 (2008). In 1993, the
Legislature codified these trusts "to provide clarity and uniformity." Id.
Also in 1993, Congress authorized the use of supplemental needs
trusts to enable disabled individuals to maintain Medicaid eligibility.
ld. at 434-35; see 42 U.S.C. § 1396p(d)(4)(A). The Legislature then
amended New York law governing these trusts to ensure conformity
with federal law. Matter of Abraham XX., 11 N.Y.3d at 435.
Federal and conforming state laws thus authorize supplemental
needs trusts. In exchange for overlooking the trust assets, these laws
require any such trust funded with the assets of the disabled individual
to provide a remainder interest to the State. 42 U.S.C. § 1396p(d)(4)(A);
Social Services Law (SSL) § 366(2)(b)(2)(iii)(A). This remainder interest
affords the State the possibility of recouping Medicaid benefits paid for
the person from whatever assets are left in the trust when the person
dies. The supplemental needs trust thus represents a "bargain struck
between the [trust's] beneficiary and the State." Matter of Abraham
XX., 11 N.Y.3d at 436.
2. Procedures for creating a supplemental needs trust
The beneficiary of a supplemental needs trust cannot initiate its
formation. Federal law provides that "[trust] assets of an individual
under 65 who is disabled" do not count toward Medicaid eligibility if the
trust "is established for the benefit of such individual by a parent,
grandparent, legal guardian or a court." 42 U.S.C. § 1396p(d)(4)(A).
State law imposes the same requirements. SSL § 366(2)(b)(2)(iii)(A).
The relevant Estates, Powers and Trusts Law (EPTL) provisions
align with these provisions of the federal and state Medicaid statutes.
Like those statutes, the EPTL provides that a trust beneficiary may
fund the trust with her own assets-in the EPTL's terms, may serve as
the trust's "creator"-only if the trust meets the requirements of SSL
§ 366(2)(b)(2), including the remainder-interest requirement. EPTL § 7-
1.12(a)(5)(v); see id. § 1-2.2 (defining "creator" as "a person who makes a
disposition of property"). Nonetheless, as noted, the trust's beneficiary,
even if she is the trust's creator, cannot establish the trust for herself.
4
EPTL § 1-2.20 defines a lifetime trust as a trust created other
than by will. Lifetime trusts can be validly established only with certain
formalities: a written trust instrument must be executed and
acknowledged by the person establishing the trust and, unless this
person is the sole trustee, by at least one trustee. EPTL § 7-1.17(a).
Although a supplemental needs trust, which is created during a
disabled individual's lifetime, would otherwise fall within the definition
of a lifetime trust and thus be subject to the formality requirements, the
EPTL expressly provides that certain trusts created during a person's
lifetime are not lifetime trusts. These excluded trusts include any "trust
created by the judgment or decree of a court." Id. § 1-2.20. Any
supplemental needs trust established by a court-like the Gaines trust
here-comes within this exclusion.
Supplemental needs trusts play an important role in the
administration of the Medicaid program, which, in New York City, is
administered by HRA under the supervision of the State Department of
Health. See SSL §§56, 363-a. Although the recovery from an individual
trust is often a fraction of the decedent's Medicaid costs, HRA recovers a
substantial amount of money collectively each year. Those funds return
to the Medicaid budget to provide for the medical needs of other low-
income individuals.
B. Supreme Court's Establishment of Gaines's Supplemental
Needs Trust
Janie Gaines, who suffered from diabetes and blindness, received
$1.32 million in Medicaid benefits from 1990 until her death in
November 2010 (Record on First Department Appeal ("R.") 107 ~ 4, 133
~ 4). In 2003, she brought a personal-injury action in Supreme Court,
Bronx County, against the City of New York and other defendants after
she was injured while riding on a transit bus (R. 133 ~ 3, R. 134 , 5). In
early 2010, she settled the action for $600,000 (R. 108).
Gaines recognized that the settlement could jeopardize her
continued eligibility for Medicaid (R. 130 , 7). In February 2010, before
she received the settlement payment, Gaines, through Jacoby &
Meyers, the law firm representing her in the tort action, informed HRA
5
of her wish to form a supplemental needs trust (R. 108, 7). The letter
enclosed a copy of the proposed trust agreement for HRA's review (id.).
Two months later, Gaines submitted a notice of unopposed motion
and accompanying verified petition to the court overseeing the personal-
injury action. She asked the court to issue an "Order ... approving and
authorizing the creation of a supplemental needs trust for my benefit"
(R. 130-31). She explained: "I do not want to lose my benefits. I depend
on my benefits to live" (R. 130 , 7). She also asked the Court to
"appoint[] an appropriate independent Trustee" (R. 131), stating, "I
currently do not have any family member nor an acquaintance who I
would trust to assume this responsibility" (R. 130, 9).
In an affirmation supporting the petition, Gaines's counsel
confirmed that the petition was "brought under Social Service [ s] Law
§ 366(2)(b)(iii)(B) [sic] which provides for the establishment by a Court
of competent jurisdiction" a supplemental needs trust (R. 135 , 10). She
explained that the attached trust agreement reflected HRA's revisions,
which Gaines agreed to accept (R. 135 ~ 15). Her counsel requested that
Supreme Court establish the trust, order that the net proceeds of
Gaines's settlement be paid to the trust, and direct the appointment of a
trustee (R. 136).
On July 26, 2010, Supreme Court, Bronx County (Walker, J.),
granted Gaines's petition after finding that establishing the trust was
in her "best interests" (R. 121). Justice Walker's order directed that six
things be done.
The first three portions of the order established the trust. The
order provided that (1) the "Janie Gaines Irrevocable Supplemental
Needs Trust ... is hereby established"; (2) Lorraine Coyle, Esq. is
"hereby appointed Trustee"; and (3) the settlement proceeds (incorrectly
listed as $300,000 instead of $600,000)2 "shall be paid" to the trustee
after payments of attorneys' fees, disbursement, and liens (R. 122).
2 Later, Justice Sherman recognized, as does the Estate's attorney (R. 210), that the
$300,000 figure is a typographical error (R. 13).
6
The other three portions of the order were directions to perform
ministerial tasks and directives on Medicaid reimbursement. The order
(1) "incorporated" the proposed trust agreement "by reference" and
directed that an executed agreement "shall be filed" with the clerk of
the Court; (2) ordered that payment of any HRA lien "be deferred" until
Gaines's death; and (3) commanded that all remaining income "be paid"
to Gaines's estate upon the trust's termination and the payment of any
HRA liens (id.).
The trust agreement that was incorporated by reference in Justice
Walker's order stated that the trust "is established pursuant to the
Order of the Supreme Court of the State of New York, County of Bronx"
(R. 139). It provided that the trust would terminate upon Gaines's death
(R. 142). And it stated that, upon Gaines's death, the trustee "shall
distribute any principal and accumulated interest" to HRA to reimburse
it for the total medical assistance paid for Gaines's benefit (id.).
C. HRA's Unsuccessful Attempts to Enforce Gaines's Trust
Mter Justice Walker established the trust in July 2010, Gaines
continued to receive Medicaid benefits. In September 2010, Gaines
received a check for half of her settlement award; she endorsed the
check, and Jacoby & Meyers deposited the money into an escrow
account (R. 264 ~ 6).3
Gaines died in November 2010. Neither Jacoby & Meyers nor the
trustee informed HRA or the Court of her death (R. 109 ~~ 11-12).
In February 2011, after learning that Gaines had died, HRA
informed Jacoby & Meyers that it was entitled to Medicaid
reimbursement (R. 152). Jacoby & Meyers refused to release the funds.
Gaines's counsel told HRA that Gaines "died before the trust was
funded" and that Coyle, despite her appointment as trustee, "never
qualified [as trustee] because of Ms. Gaines's death" (R. 188 ~ 15
(quotation marks omitted)). Her attorneys offered no explanation for
3 Gaines's estate received the other half of the settlement fi·om another defendant
after her death (R. 15).
7
failing to comply with Justice Walker's order ih the months before
Gaines's death.
HRA brought a motion in Supreme Court for an order directing
distribution in accordance with Justice Walker's order and the terms of
the trust. A different Justice (Sherman, J.) ruled on the motion. He
concluded that Gaines's trust was not enforceable because Gaines and
the trustee had failed to execute the trust agreement and the trustee
had not qualified (R. 200).
HRA appealed, and the First Department vacated the order for
lack of jurisdiction because no party had been substituted for the
deceased Gaines (R. 203). On remand, Gaines's estate moved to
substitute Clarence Gaines, her father, as plaintiff (R. 27 ~~ 7 -8). HRA
cross-moved for an order directing Jacoby & Meyers to pay the net
settlement proceeds to the trustee and directing the trustee to
reimburse HRA from the trust (R. 118-19).
Justice Sherman denied HRA' s. cross-motion. Relying on state
statutes applicable only to lifetime trusts, the court held that the trust
was invalid because Gaines and Coyle never executed the trust
agreement and the trust was nevetfunded (R. 18).
The First Department affirmed. Gaines v. City of New York , 137
A.D.3d 673, 673 (1st Dep't 2016). The court held that Gaines's trust was
a lifetime trust and thus invalid because Gaines and the trustee never
completed the required formalities. Id. The court further held that
although EPTL § 1-2.20 exempts a trust "created by [a] judgment or
decree of a court" from the formality requirements, Gaines's trust did
not meet this exception because Justice Walker's order did not "create"
the trust and was not a "judgment or decree." Id. (quotation marks
omitted).
The First Department granted HRA leave to appeal to this Court.
ARGUMENT
Justice Walker's order plainly intended to bring the Gaines trust
into existence. Gaines herself asked the court to issue an order doing
just that. The First Department held, however, that the trust was
8
invalid because Gaines and the trustee failed to later fulfill the
formalities set forth in statute for lifetime trusts.
But Gaines's trust was not subject to those requirements; EPTL
§ 1-2.20, which defines a lifetime trust, expressly excludes trusts
"created by the judgment or decree of a court." The First Department's
misguided interpretation of the terms "created" and "judgment or
decree" in this exception finds no basis in the EPTL or New York law
more generally. Its reading would nullify the exception entirely.
The First Department's mistaken interpretation would have
serious consequences for HRA's ability to administer benefits for
Medicaid recipients with supplemental needs trusts, would put disabled
persons at risk of losing their Medicaid benefits through error or
exploitation, and would threaten the validity of numerous existing
court-created trusts. Justice Walker's order validly created Gaines's
trust, and HRA is entitled to reimbursement from the trust remainder.
A. Gaines's Trust Was Valid Without the Formalities of a
Lifetime Trust Because It Was "Created by the Judgment
or Decree of a Court."
In holding that Gaines's trust was not a trust "created by [a]
judgment or decree of a court," the First Department erred in two
fundamental respects. Gaines, 137 A.D.3d at 673 (1st Dep't 2016)
(quoting EPTL § 1-2.20).
First, contrary to the court's reasoning, Justice Walker's order
"created" the trust-that is, it brought the trust into existence. The
First Department apparently adopted the Estate's position that trust
formation requires a separate act of trust "creation" after a court
establishes the trust. But New York law does not recognize any
distinction between "establishing" and "creating" a trust; the terms are
used interchangeably, consistent with their ordinary usage. The Estate
simply invented the purported distinction between the two synonyms.
Second, Justice Walker's order constituted a "judgment or decree"
within the meaning of the statute because New York law does not
maintain a rigid boundary between rulings denominated as orders and
9
those denominated as judgments when, as here, there is no basis to
distinguish between them.
1. Justice Walker's order "created" the trust.
a. No distinction between creating and establishing a
trust exists in New York law.
The First Department's holding relies on a distinction between
"establishing" and "creating" a trust that has no basis in New York law.
Rather, as common sense would suggest, trust law uses both terms in
their ordinary sense as synonyms for the act of forming a trust.
If the proposed distinction were to exist, one would expect to see it
in the case law. Courts would be careful to reserve the word "establish"
and the word "create" for different actions. But courts do no such thing.
Instead, they use the words interchangeably to describe the formation
of a trust.
Most significantly, this Court has used the terms interchangeably.
In Matter of Abraham XX. , this Court referred to the formation of a
disabled child's supplemental needs trusts alternately as a "creat[ion]"
and an "establishment." 11 N.Y.3d at 438-39. In dissent, Judge Smith
did so as well, referring throughout his opinion to the "creation" or
"establish[ment]" of the trust-without any indication that he was
using these terms in a technical manner to describe different acts. ld. at
439, 441.
The lower courts similarly use the terms interchangeably. See,
e.g., Sanango v. N.Y. City Health & Hosp. Corp. , 6 A.D.3d 519, 520 (2d
Dep't 2004) (using both "creation" and "establishment"); Matter of
Rappaport, 21 Misc. 3d 919, 922-25 (Sup. Ct. Nassau Co. 2008)
(agreeing to construe the decedent's will to "create a third-party
supplemental needs trust" after alternately stating that EPTL § 7.1-12
permits the "establishment" or "creation" of a supplemental needs
trust); Matter of Miller, 20 Misc. 3d 1lll(A), 2008 N.Y. Misc. LEXIS
3843, at *1, *8 (Sup. Ct. Queens Co. June 30, 2008) (granting "Order
10
creating a supplemental needs trust" because a "properly established"
trust could have been created earlier). 4
And treatises do too. In a section titled "Who Can Create
Supplemental Needs Trust," a leading New York treatise provides that
these trusts "may be established by a parent, grandparent, legal
guardian, or court of competent jurisdiction." 12-211 Warren's Heaton
on Surrogate's Court Practice § 211.04 (2015).
b. Gaines's conduct before Supreme Court belies the
purported distinction between creating and
establishing a trust.
Gaines also used the terms "create" and "establish"
interchangeably before Justice Walker. Her petition asked the court to
"enter an Order" to "creat[e] ... a supplemental needs trust" (R. 130-31).
In an accompanying affirmation, her attorney explained that Gaines
was bringing her petition under state and federal law, which sanctioned
the court's "establishment" and "creation" of the trust (R. 135 ~~ 10-11).
And Justice Walker's order, which Gaines likely proposed, notes that
Gaines wanted a trust to be "creat[ed]," and ordered that the trust be
"hereby established" (R. 121, 122). These words were intended to mean
the same thing.
Even more telling is how Gaines's attorneys conducted themselves
in Supreme Court. If her attorneys had believed that the formality
requirements applied to her court-created trust, they would have acted
immediately to ensure that those formalities were completed. By their
own logic, Justice Walker's order never caused the trust to come into
existence, and thus their client would have lost her eligibility for
Medicaid unless the trust formalities were promptly completed. Yet
4 Neither case cited by the First Department, see Gaines, 137 A.D.3d at 674,
supports its interpretation of EPTL § 1-2.20; neither case even involves a
supplemental needs trust. See Matter of Bishop v. Maurer, 73 A.D.3d 455 (1st Dep't
2010); Fasano u. DiGiacomo, 49 A.D.3d 683 (2d Dep't 2008). Instead, they involve
lifetime trusts and apply the rules applicable only to those trusts. They do not
concern the situation here: a trust that under EPTL § 1-2.20 is not a lifetime trust.
11
they did nothing for months, which-under their own theory-exposed
their client to the needless risk of losing her Medicaid benefits.
c. The Legislature did not distinguish between creating
and establishing a trust by defining the term
"creator."
The First Department apparently accepted the Estate's argument
that creation is a distinct step in trust formation because "creator'' is a
defined term in the EPTL. See Stack Br. at 13-17.5 The EPTL defines
"creator'' as the person whose assets are used to fund the trust. EPTL
§ 1-2.2. Thus, the argument goes, only the trust's creator can create the
trust. This claim is incorrect: while the noun "creator" is a term of art in
the EPTL, the verb "create" is not, and it is nowhere distinguished from
its common-usage synonym "established."
The Estate's interpretation finds no support in the EPTL. If it
were correct, it would render the exception in EPTL § 1-2.20 a nullity. If
courts can only establish trusts, no trust could ever be created by a
judicial ruling, unless the court were itself the source of the funds. This
exception thus would never come into play for any lifetime trust.
Because statutory interpretation must give "meaning and effect ... to all
language of a statute," the First Department's interpretation IS
untenable. Cohen u. Lord, Day & Lord, 75 N.Y.2d 95, 100 (1989).
The Legislature has already instructed courts not to read the
narrow, technical definition of "creator" into every provision of the
EPTL that uses some variation of the word "create." The Legislature's
2010 clarifying amendment to EPTL § 7-1.17, which specifies the
requirements for creating a lifetime trust, makes this clear and further
confirms that the verbs "create" and "establish" are interchangeable in
this context as they are generally.
Before the amendment, EPTL § 7-1.17 stated that a lifetime trust
had to be executed by the "initial creator." Bill Jacket, L. 2010, ch. 451
~ "Stack Br." refers to the brief flied in the First Department by Ms. Stack on behalf
of the Estate.
12
at 6. The Legislature came to realize that this provision "inadvertently
invoke[d]" a defined term and strangled the statute's meaning. Id.
"[U]nder a literal reading" of the provision, only the person who
contributed property to a lifetime trust (the creator) could execute the
trust documents and form the trust. Id. This literal reading made no
sense: "well established" law provided that "a trust may be created by a
person other than" the creator. Id.
To address this unintended limitation, the Legislature replaced
the phrase "initial creator" in the statute with a synonym that avoided
the term's narrow, technical meaning: "person establishing such trust."
Id. at 6. In making this change, the Legislature explained that the
amendment did not change the law, but clarified it, providing a
necessary fix to "carryO out the intention of the 1997 legislation." Id.
EPTL § 7-1.17 still describes how to form a lifetime trust-but now as
an act of "establish[ment]" instead of an act of creation.s In short, the
2010 amendment clarified that when the Legislature reformed the law
on lifetime trusts, it intended that even the word "creator"-despite its
express technical def~nition-would have its common-sense meaning,
namely, a person who establishes (brings into existence) a trust.
Importantly, the Legislature initially enacted EPTL § 7-1.17 in the
same bill as EPTL § 1-2.20, the statute with the exception in dispute
here. See Bill Jacket, L. 1997, ch. 139 at 7. The Legislature's
clarification that "creator" carried its common meaning in § 7-1.17, as
the "person establishing [the] trust," should guide the interpretation of
§ 1-2.20 as well. In fact, the legislative flx has even more significance for
§ 1-2.20, which contains the verb "create" rather than the defined noun
"creator."
The First Department's misguided distinction between
establishing and creating a trust renders other provisions of the EPTL
nonsensical too. EPTL § 7-1.4 provides that "[a]n express trust may be
created for any lawful purpose." And in EPTL § 1-2.20-the statute in
6 EPTL § 7-1.17 (a) now reads: "Every lifetime trust shall be in writing and shall be
executed ... by the person establishing such trust."
13
dispute-a lifetime trust is defined as, subject to exceptions, "an express
trust ... created other than by will." Under the First Department's
interpretation, because the word "created" is used in both statutes, only
creators could form express trusts or lifetime trusts. But that
interpretation makes no sense: state law allows any qualified person to
form an express trust or a lifetime trust, not just the person whose
assets fund the trust. 7 See EPTL § 7-1.14.
The First Department's interpretation of EPTL § 1-2.20 is thus
the very sort of crabbed reading that the Legislature rejected when it
amended EPTL § 7-1.17 in 2010. The use of "created" in EPTL § 1-2.20
is simply another example of the widespread understanding-on the
part of the Legislature, this Court, lower courts, and treatise writers
alike-that "creating" a trust and "establishing'' a trust describe the
same thing.
d. The First Department's interpretation conflicts with
the federal and state Medicaid statutes.
The First Department's distinction between establishing and
creating a trust is also unsound because it would produce conflicts
between the EPTL and the relevant provisions of state and federal
Medicaid law. That outcome would thwart the Legislature's
demonstrated intention to ensure consistency among the statutes and
Congress's intent to ensure uniformity in Medicaid law.
Both federal and state law permit supplemental needs trusts to be
"established" only by a disabled person's parent, grandparent, or legal
guardian, or by a court. See 42 U.S.C. § 1396p(d)(4)(A); SSL
§ 366(2)(b)(2)(iii)(A). These restrictions thus prohibit disabled persons
7 The First Department's reading also renders the execution requirement for
lifetime trusts incomprehensible. EPTL § 7-1.17 requires that a lifetime-trust
instrument be ''executed ... by the person establishing such trust." In the case of a
supplemental needs trust established by a court, that "person" is the court. See
EPTL § 1-2.12 (defming "person" to include a court). If the execution requirement
applied to court-created supplemental needs trusts, the judge or justice would have
to sign, and thereby become a party to, the trust instrument.
14
from establishing trusts on their own behalf. Under the First
Department's reasoning, however, a valid supplemental needs trust
could not come into existence under New York law unless, after the
court's order, the disabled person "created" the trust by executing the
trust documents and fulfilling the other formalities of a lifetime trust.
The trust would be brought into existence by the disabled person's
actions, not the court's order.
But "[s]tatutes that relate to the same subject are in pari materia
and should be construed together unless a contrary intent is clearly
expressed by the Legislature." Matter of Albany Law School v. N.Y.
State Off of Mental Retardation & Dev. Disabilities, 19 N.Y.3d 106, 121
(2012) (citation and quotation marks omitted). This principle applies
with particular force here because Medicaid is a coordinated federal-
state program where consistency between state and federal law is
particularly important; under federal law, state law must "comply with
the provisions of section 1396p of this title with respect to ... treatment
of certain trusts." 42 U.S.C. § 1396a(a}(18). The enactment history of
relevant state legislation confirms that the Legislature intended to
ensure that state law governing these trusts would harmonize with
federal law. See Matter of Abraham XX., 11 N.Y. 3d at 435; Bill
Memorandum for A. 11854 at 37-38, reprinted in Bill Jacket, L. 1994,
ch. 170 (explaining that the bill enacts "federal changes regarding
Medicaid trusts"). Not surprisingly, even Gaines's counsel
acknowledged before Supreme Court that New York law governing
supplemental needs trusts "conforms with federal law" (R. 135 ~ 12).
2. Supreme Court's ruling was a "judgment or decree"
under the statute.
The First Department's opinion also rests on the faulty conclusion
that Justice Walker's ruling was not a "judgment or decree" under
EPTL § 1-2.20. This interpretation arbitrarily distinguishes between
trusts created by functionally equivalent orders and judgments.
Regardless of its label, any trust established by a binding judicial edict
is exempt from the formalities of a lifetime trust.
By exempting trusts "created by the judgment or decree of a
court," the Legislature did not intend to narrow the set of binding
15
judicial edicts that would obviate the need for lifetime-trust formalities.
Instead, the phrase "judgment or decree" reflects the Legislature's
broad intent to exempt any court-created trust originating in the courts
with authority to create them: both Supreme and Surrogate's Courts.
Neither the Estate nor the First Department identified any reason to
differentiate between trusts established by a court based on whether
the ruling creating them is denominated an "order" or a "judgment,"
and there is none.
The Legislature reasonably expected that a judicially created trust
generally would be embodied in one documents denominated as
"judgments" or "decrees." This expectation reflects the fact that most
court-created trusts arise from new proceedings initiated solely to
create the trust; those proceedings naturally culminate in a judgment
(in Supreme Court) or decree (in Surrogate's Court) forming the trust.
See, e.g., In re Zhou Ping Li, 2005 N.Y. Misc. LEXIS 3592, *24 (Sup. Ct.
Kings Co. Nov. 1, 2005) ("decision, order, and judgment" establishing
supplemental needs trust); In re Fiorillo, 2005 N.Y. Misc. LEXIS 4 704,
at *3 (Sur. Ct. N.Y. Co. Oct. 12, 2005) (decree creating supplemental
needs trust). The situation here, where a court overseeing a tort action
is asked to create the trust, does not present the typical case envisioned
by the Legislature. But there is no reason to conclude that the
Legislature intended that such an order, which is final to the trust,
would have a different status.
The clear legislative intention reflected In EPTL § 1-2.20 is
confirmed in New York law more broadly, which generally takes a
functional approach to distinguishing judgments from other forms of
judicial edicts, rather than relying on the labels attached to them. For
example, in 1997 the Legislature amended CPLR 550l(c) to clarify that
the notice of appeal from an order directing summary judgment "shall
be deemed to specify a judgment upon said order," enabling parties to
appeal from the order just as they could a later judgment having the
same effect. The Legislature concluded that this "technical change" was
necessary because a decision of this Court, by holding that the entry of
judgment can terminate a direct appeal from an intermediate order,
had created a "procedural trap" for parties, forcing them to take the
inefficient step of filing an additional notice of appeal after entry of
judgment. Bill Jacket, L. 1997, ch. 474 at 4. The Estate's interpretation
16
of EPTL § 1-2.20 relies on the same sort of overly narrow construction of
the term "judgment" that the Legislature rejected in amending CPLR
5501(c).
Not surprisingly, courts have "treated orders as tantamount to
judgments depending on the particular circumstances." Matter of N.Y.
State Crime Victims Bd. v Gordon, 66 A.D.3d 1213, 1216 (3d Dep't
2009). A "court order that fully resolves the claim" has been "treated as
tantamount to a judgment" for purposes of the Son of Sam law. Id. And
the filing of a so-ordered stipulation "effectively discontinuing the
action" has been held "tantamount to the filing of a judgment." DiBella
v. Martz, 58 A.D.3d 935, 937 (3d Dep't 2009); see also State v. Wolowitz,
96 A.D.2d 47, 54 (2d Dep't 1983) ("The paper being appealed from, while
labeled an order, is, in fact, an order and a final judgment."). The
ruling's substance, not the label placed upon it, is what controls.
This Court takes a similar approach to assessing finality for
purposes of its appellate jurisdiction. In certain situations, the Court
regards orders made in ongoing proceedings as final where they finally
resolve a separate or distinct issue. See Arthur Karger, Powers of the
New York Court of Appeals §§ 3:3, 5:21-5:28 (rev. 3d ed. 2005). Thus,
"[t]he mere fact that [an] order was made on a motion in a pending
action does not impair its finality." Merrill Lynch, Pierce, Fenner &
Smith Inc. v. Griesenbeck, 21 N.Y.2d 688, 690 (1967). By the same
reasoning, an order that finally establishes a trust, like Justice
Walker's here, is functionally indistinguishable from a judgment
rendered in a separate proceeding initiated solely for that purpose.
Conduct by Gaines and her attorneys confirms that they
understood the ruling they sought as tantamount to a judgment. Gaines
proceeded by notice of motion, but supported the motion with · a
"Verified Petition," and the papers repeatedly referred to her as the
"Petitioner" instead of the plaintiff, which was her party designation in
the tort action (R. 128-36). Gaines could have filed the very same
petition to commence a formally separate proceeding to create the trust,
rather than presenting it, as a matter of convenience and efficiency, as
an application within her pending tort action. If she had done so, there
would be little doubt that the resulting ruling would have been exempt
from the statutory requirements for lifetime trusts. There is no basis to
17
treat Justice Walker's ruling differently from any judgment or decree
that Gaines would have received had she filed her petition under a new
index number in the courtroom next door.
A court should reject a formalistic construction of the term
"judgment" that excludes a functionally equivalent order when
"legislative history reveals no such intent and no cogent reason has
been advanced for such an exclusion." Gordon, 66 A.D.3d at 1215; cf
Williams v. Williams, 23 N.Y.2d 592, 599 (1969) ("If the statute is so
broadly drawn as to include the case before the court, yet reason and
statutory purpose show it was obviously not intended to include that
case, the court is justified in making an exception through
implication."). That is the case here. Neither the First Department nor
the Estate has pointed to any evidence that the Legislature intended
the term "judgment" in EPTL § 1-2.20 to refer only to rulings
denominated as such rather than encompassing all binding rulings
establishing trusts. Nor have they advanced a plausible explanation
why it might have intended to draw such a distinction.
Courts establishing supplemental needs trusts have done so by
rulings denominated as orders, without suggesting that, because the
ruling was not labeled a judgment, the trusts would come into existence
only after another party completed the trust formalities. See, e.g.,
Miller, 2008 N.Y. Misc. LEXIS 3843, at *1 (agreeing to issue an "Order
creating a Supplemental Needs Trust"); In re Smith, 2006 N.Y. Misc.
LEXIS 4340, at *1 (Sur. Ct. Suffolk Co. Dec. 18, 2006) (granting order
establishing supplemental needs trust); In re Self-Petition of Gillette,
195 Misc. 2d 89, 91 (Sur. Ct. Broome Co. 2003) (establishing trust after
reviewing petitioner's proposed order). And when appellate courts have
reviewed these rulings, they have not questioned the trusts' validity or
treated them differently based on the label placed on the rulings
creating them. 8
s See, e.g. , Calvanese v. Calvanese, 93 N.Y.2d 111, 116 (1999) (affirming reversal of
"the Supreme Court orders establishing supplemental needs trusts" because all
settlement proceeds are available to satisfy Medicaid liens); Sanango, 6 A.D.3d at
520 (reversing a provision in lower court's order establishing a supplemental needs
Continued ...
18
Ultimately, it is so common for courts to create these trusts by
ruling denominated an "order" that practitioners have developed a
model proposed order for the practice. See 39-EPTL 7-1.12 Bender's
Forms for the Civil Practice Form No. EPTL 7-1.12:2 (2015). The First
Department's interpretation creates a distinction that has not
previously been recognized, and that would cast doubt on the validity of
an unknown number of existing trusts created this way.
3. The concerns animating the formalities for lifetime
trusts do not apply when a court creates the trust.
The First Department's interpretation also cannot be squared
with the underlying function of the formality requirements. The
Legislature imposed these requirements to bring a "degree of formality''
to lifetime trusts to "help[] the parties involved realize the serious
nature of the instrument being executed and reduceD substantially the
potential for foul play." Bill Jacket, L. 1997, ch. 139 at 8. New York
courts, however, created the first supplemental needs trust long before
the Legislature decided to reform the law on lifetime trusts. In light of
the courts' longstanding role in the creation of these trusts, it should
come as no surprise that the Legislature expressly excluded court-
created trusts from the lifetime-trust formalities.
For supplemental needs trusts created by a disabled person's
family, the formality requirements help to curb any potential for
misunderstanding or fraud. But that policy concern has minimal
relevance when a court creates the trust. The judicial process, ·which
demands candor and clarity from the parties, sufficiently substitutes for
the formality requirements. The signatures of Gaines and the trustee on
the trust instrument would have provided little more.
A court-created trust also provides an additional layer of
protection that obviates the need for formalities. When a party petitions
a court to establish a trust, the court must review the proposed trust to
ensure that it complies with the law. It may also consider, as Justice
trust because the provision directed any future annuity payments after the infant's
death to the estate instead of the trust, in violation of SSL § 366(2)(b)(2)(iii)).
19
Walker did here, whether the trust is in the disabled beneficiary's "best
interest." Legal Service ex rel. Thomas C. v. Bishop, 298 A.D.2d 644, 64 7
(3d Dep't 2002). With this inquiry, there is no reason to hinge the trust's
validity on the completion of formalities .
B. The First Department's Interpretation Would Undermine
the Legislative Scheme, Harming Both the Public Fisc and
Persons with Disabilities.
The Firs.t Department's holding also contravenes the public policy
behind supplemental needs trusts-for parties at both ends of the
bargain. By holding that certain court-created trusts must meet
additional requirements that the Legislature expressly declined to
impose, the First Department has reintroduced uncertainty into this
area of the law.
Under the First Department's holding, social-services districts
responsible for enforcing Medicaid laws could no longer rely on orders
issued by courts as evidence that a valid trust exists. This uncertainty
would add significant complexity to the administration of Medicaid
benefits, requiring case workers (who are not lawyers) to attempt to
determine whether the lifetime-trust formalities had been met. HRA
would have to demand prompt proof that the formalities had been
satisfied, and would have to discontinue benefits if the disabled person
fails to submit sufficient evidence.
The First Department's statutory interpretation would also call
into question the validity of numerous supplemental needs trusts that
have been established by courts in the past. If the creators of those
trusts failed, as Gaines did, to complete the formalities required of a
lifetime trust, the trusts would not ensure their continued Medicaid
eligibility and would not provide HRA with a remainder interest. HRA
would have to demand proof of those formalities for every existing trust,
or else jeopardize its ability to recover money that could be used to help
other disabled individuals.
Persons with disabilities also could no longer rely on court rulings
denominated as orders that establish trusts for their benefit. They
would face discontinuation of benefits unless they, their trustees, and
20
their lawyers completed formalities following the court's order and
provided documentation confirming that they had done so. If any of
those parties failed to take the required steps, the trust would be
invalid and the trust assets would count against the beneficiary's
Medicaid eligibility.
C. All Other Requirements for Creation of the Trust Were
Satisfied.
Because the statutory formality requirements of lifetime trusts do
not apply to court-created supplemental needs trusts, traditional
principles of trust law govern whether Gaines's trust is valid. By law, a
valid trust requires four components: (1) a designated beneficiary, (2) a
designated trustee, (2) property sufficiently identified to enable title of
the property to pass to the trustee, and ( 4) legal assignment or actual
delivery of the property, with the intention of vesting legal title in the
trustee. Estate of Judith N. Doman, 2008 N.Y. Misc. LEXIS 6314, at *7
(Sur Ct. Suffolk Co. Oct. 6, 2008) (citing Brown v. Spohr, 180 N.Y. 201,
209 (1904)), aff'd sub. nom. Matter of Doman, 68 A.D.3d 862, 863 (2d
Dep't 2009).
All four components are present here. Gaines was designated as
beneficiary and Coyle, who was properly served with Justice Walker's
order (R. 123), was designated as trustee. The net settlement amount is
the property. Because Gaines sought a supplemental needs trust to
shelter her assets, she agreed to assign her assets to the trust. Justice
Walker ordered that that property "shall be paid" to Coyle as trustee (R.
122). Justice Walker thereby established a valid trust on her behalf.
* * *
Gaines asked for, and received, a ruling establishing a
supplemental needs trust that would allow her to enjoy the substantial
proceeds of her tort settlement while retaining her Medicaid benefits.
The only true requirements for the establishment of that trust were
satisfied. The First Department erred in holding that additional
formalities were needed for the trust to come into existence.
21
CONCLUSION
The First Department's decision and order should be reversed.
Richard Dearing
Claude S. Platton
of Counsel
cc: Tamara Stack
355 Lexington Avenue
Suite 401
New York, New York 10017
22
y submitted,
Eric Lee
Assistant Corporation Counsel
CERTIFICATE OF COMPLIANCE
I hereby certify that this letter brief was prepared using Microsoft
Word 2010, and according to that software, it contains 6,977 words in
the body of the submission.
Eric Lee
Cited
As of: November 18, 2016 12:43 PM EST
Matter of Miller
Supreme Court of New York, Queens County
June 30, 2008, Decided
23717/06
Reporter
20 Misc. 3d 1111(A) *; 867 N.Y.S.2d 376 **; 2008 N.Y. Misc. LEXIS 3843 ***; 2008 NY Slip Op 51314(U) ****; 240 N.Y.L.J. 13
[****1] In the Matter of the Application of New York City
Health and Hospitals Corp., Elmhurst Hospital Center
for the Appointment of a Guardian of Robert Miller, A
Person Alleged to be Incapacitated.
Notice: THIS OPINION IS UNCORRECTED AND WILL
NOT BE PUBLISHED IN THE PRINTED OFFICIAL
REPORTS.
Core Terms
Guardian, incapacitated, nunc pro tunc, retroactive,
Medicaid, appointed, competent person, incapacity,
transfers, planning
Headnotes/Syllabus
Headnotes
[*1111A] [**376] Trusts--Supplemental Needs Trust--
Retroactive Approval.
Counsel: [***1] Robert Kruger, Esq., Attorney for
Petitioner, New York, NY.
Petal Martindale, Esq., Michael A. Cardozo, Corporation
Counsel, New York, NY.
Grovine Y. Mattone, Esq., Property Management
Guardian, Bayside, NY.
Judges: Charles J. Thomas, J.S.C.
Opinion by: Charles J. Thomas
Opinion
Charles J. Thomas, J.
Grovine Matone, Esq. the Guardian of the property,
applies to the Court for an Order creating a
Supplemental Needs Trust hereafter (SNT) for the
benefit of her ward Robert Miller. The Guardian
requests that the proposed medicaid planning be
approved and that the proposed SNT submitted on
behalf of Robert Miller be approved nunc pro tunc to
July 1, 2005 in accordance with the findings of
incapacity and the decision of this Court rendered April
19, 2007.
A petition was commenced on October 27, 2006 by the
New York City Health and Hospitals Corp. to appoint a
Guardian for Robert Miller, an allegedly incapacitated
person. The Petition states that Mr. Miller suffered from
several serious physical ailments including pneumonia
and a collapsed lung. The Petition requested that
standard powers be given to the Guardian appointed
including the application for Medicaid benefits on behalf
of Mr. Miller. There was nothing in the Petition [***2] to
advise the Court that Mr. Miller had funds which
required Estate Planning or the establishment of SNT.
No request was made by the City in the Petition for the
appointment of a Temporary Guardian to marshal Mr.
Miller's assets for the purpose of Estate Planning, other
than a standard vague reference to prevent financial
exploitation due to the increased vulnerability of the
alleged incapacitated person.
After several adjournments, the Court was unable to
conduct a hearing at Regal Heights Rehabilitation
Center until April 19, 2007. At that time the Court made
a finding that Mr. Miller was incapacitated and that that
incapacity had commenced prior to July 1, 2005.
At the conclusion of the hearing, the Court immediately
appointed a Property Management Guardian and
directed her to marshal the assets and submit to the
Court an Estate [****2] Plan for the benefit of Robert
Miller, including but not limited to the establishment of
an SNT, nunc pro tunc to July 2005. In marshaling the
Incapacitated Person's assets and debts the Guardian
Page 2 of 3
Eric Lee
determined that Mr. Miller's hospitalization was not paid
by Health Insurance and that he had an outstanding bill.
The Property Guardian now submits to the Court,
[***3] for approval, a First Party SNT and requests that
the Trust be approved nunc pro tunc to July 1, 2005.
New York Human Resource Administration opposed the
SNT on three grounds: (1) that the Court lacks the
authority to create an SNT nunc pro tunc;
(2) that the Order creating the SNT must direct the
Trustee to obtain a bond sufficient to cover the assets
contained in the Trust; and (3) that, as part of any SNT,
HRA be notified before the expenditure of any
transactions "tending to substantially deplete the
principal of the Trust", where the Trust is valued at more
than $ 100,000.00. or "involving transfers from the Trust
for principal for less than fair market value" in
accordance with 18 NYCRR Section 360.4.5(b)(5)(iii).
HRA's opposition to nunc pro tunc approval is twofold.
First, that the Court can not grant such relief nunc pro
tunc claiming that a court can only nunc pro tunc a fact
that is already in existence. To support its position HRA
cites three cases: See Mtr. of Rolland, 13 Misc. 3d 230,
818 NYS2d 439; Mtr. Of Gillette, 756 NYS2d 835 [195
Misc 2d 89]; and Mtr. of Hagerdorn, 9 Misc 3d 560, 800
N.Y.S.2d 338.
Second, HRA complains that if a Supplemental Needs
Trust is created, it would make the incapacitated
person's [***4] assets unavailable for Medicaid eligibility
and budgeting purposes, and would require the
Medicaid program to pay for hospital care provided the
incapacitated person. The latter is, of course, the whole
intention of legal Medicaid planning.
HRA relies upon three of these above stated cases to
support its position opposing it's creation in this case.
Each case is clearly distinguishable from the one before
this Court. In the Mtr. of Gillete, (756 NYS2d 835 [195
Misc 2d 89]). The Surrogate of Broome County refused
to approve the retroactive establishment of a SNT
claiming that the disabled person's agent-in-fact had
established a Supplemental Needs Trust pursuant to a
duly executed Power of Attorney. The court would not
create what it considered to be essentially a second
trust, even though the disabled person would be
adversely affected, as the SNT was ineffective since it
had been created by the incapacitated person's agent-
in-fact rather than by order, as required by Federal
Statute.
The Gillete court, however, did hold that "[o]rdinarily, a
court can enter an order nunc pro tunc when no person
will be prejudiced thereby." It simply would not establish
a second trust when one was already [***5] in effect.
The right to nunc pro tunc relief, while frequently
granted is usually done so in ministerial matters not
"involving new exercises of discretion or a further turn of
the fact finding wheel." Siegel, New York Practice 4th
Ed. Par. 420, p. 716. The restriction is usually directed
at preventing a trial court from exercising appellate
review over itself "to correct by amendment error in
substance affecting the judgment." Kiker v. Nassau
County, 85 NY2d 879, 649 N.E.2d 1199, 626 N.Y.S.2d
55. Rather, nunc pro tunc relief "should be permissible
for any judgment [or order] when the right sought to be
retroactivated was a right at the earlier time…, and
when all that is now sought is a paper -- a judgment or
order -- saying so. That a substantial right may be
affected by giving nunc pro tunc effect is better cited to
support than to oppose the step." Siegel, supra 717.
Unlike the Court in Gillette, Siegel acknowledges the
fact that "litigation is designated to affect substantial
rights", [****3] (supra ).
The Appellate Division, Second Department dealt with
the issue of retroactively in matrimonial cases. In
Jayson v. Jayson (83 Misc 2d 417, 373 N.Y.S.2d 497) a
matrimonial action had been commenced by Hazel
Jayson, the second wife of Robert [***6] Jayson. The
second wife had obtained a decision of a divorce but
Robert Jayson died prior to the entry of the judgment.
Erica Jayson, Robert Jayson's first wife, commenced an
action for an Order granting the entry of the judgment
nunc pro tunc to protect the rights of her and her
children to receive Social Security benefits.
The trial court in Jayson, relying on Johnson v. Johnson,
(198 Misc. 691, 692, 98 N.Y.S.2d 336 affd. 277 App.
Div. 1143, 101 N.Y.S.2d 936), held that retroactivity is
limited "where the rights of the parties of record are not
impaired or prejudiced in any conceivable degree". On
appeal, the Appellate Division, reversed, holding that a
judgment can be entered nunc pro tunc in a divorce
action after the death of one of the parties, if such party
was entitled to have had the judgment entered when
both parties were living. Jayson, supra, at 688, 387
N.Y.S.2d 274, emphasis added.
In the Mtr. of Hagerdorn, (9 Misc 3d 560, 800 N.Y.S.2d
338) the court was asked by a guardian to grant an
application to transfer the incapacitated person's funds
retroactive to the date of the incapacitated person's
20 Misc. 3 1111 , *1111 867 N.Y.S.2 376, **376 2008 N.Y. Misc. LEXIS 3843, ***2 2008 NY S i
1314 , ****2
Page 3 of 3
Eric Lee
admission to a facility in order to be eligible for medical
funding. In that case, the Guardian had been appointed
prior to his admission into a nursing [***7] facility but
failed to make any provisions prior thereto. The Watson
court acknowledged that the parties did not dispute the
court's ability to approve such transfers retroactively but
the County disputed that date to which the transfers
could be made retroactive. The court in Watson
approved the retroactive transfers to the date of the
application rather than the earlier date of the
incapacitated person's admission to the facility. In doing
so the court viewed a Guardian, duly appointed, in the
same light as a competent person. The court reasoned:
[s]ince the Court does not have authority to grant
an application to a competent person to make a
desired gift retroactive by several months to avoid
the medicaid consequences, neither does it have
the authority to grant the same relief to a guardian
for the benefit of her incompetent. The premise
behind MHL Sec. 81.21 in approving medicaid
transfers was to give the guardian the same rights,
that the incompetent would have had if not
incompetent, but no greater.
Relying on the Mtr. of Lauda, the Court noted…
[g]oing back to the noted underlying rationale for
permitting Medicaid planning in the first place, we
do not believe greater restrictions [***8] should be
placed on a competent person except to the
extent required by the former's incapacity.
(N.Y.L.J., July 2, 1996, p.25 (Sup. Ct. Nassau
Co.)). See also NY Law Rev. Comm. Comments to
MHL 81.03)".
Here Mr. Miller was incapacitated at the time he was
admitted to the facility and had neither a Guardian or
agent authorized to act on his behalf in the creation of
an SNT. While an incapacitated person, who has a
Guardian to act on his or her behalf should not have a
benefit greater than a competent person, an
incapacitated person without the aid of a Guardian
should not be given any lesser rights simply because he
is incapacitated.
Just as the Court in Watson, tried to equalize the
restrictions between a competent person [****4] and a
Guardian, this Court will not penalize an Incapacitated
Person for the very incapacity this Court is charged with
protecting.
Robert Miller was clearly entitled to a judgment which
contained a properly established SNT. Such judgment
would have been timely established but for his
incapacity in 2005 and the failure by the City of New
York to request such relief in its Petition which would
have been immediately granted in the Order to Show
Cause commencing the proceeding [***9] and if
authorized, the Guardian would have acted prior to the
critical date.
The Court notes that there is an inherent conflict of
interest when one municipal agency commences a
guardianship petition which may require a different
municipal agency to pay for the hospital costs and care
of an individual. Therefore, the court must grant the
guardian's application.
To hold otherwise would create an incentive for the
agency charged with bringing such Petitions to delay the
commencement of such proceedings and refrain from
requesting relief to which a respondent may be entitled.
As to the remaining objections raised by HRA, the
language request by HRA in item (3) is not
unreasonable and therefore shall be included in the final
Order. As to the second objection raised by HRA, it is
the Court's custom, as it will be in this case, that the
order shall contain language that the Guardian shall be
bonded for the entire guardianship which shall include
the amounts included in the SNT.
Charles J. Thomas, J.S.C.
End of Document
20 Misc. 3 1111 , *1111 867 N.Y.S.2 376, **376 2008 N.Y. Misc. LEXIS 3843, ***6 2008 NY S i
1314 , ****3
Eric Lee
Cited
As of: November 18, 2016 1:07 PM EST
In re Zhou Ping Li
Supreme Court of New York, Kings County
November 1, 2005
101000/93
Reporter
2005 N.Y. Misc. LEXIS 3592 *; 234 N.Y.L.J. 85
Matter of Zhou Ping Li
Core Terms
benefits, services, supplemental, incapacitated,
stipulation of settlement, transfers, planning, costs,
deed, per day, opposing, asserts, proposed transfer,
nursing home, home health care, monthly income, cash
assets, establishment, expenses, guardian, annual,
home care, per annum, ineligible, approving, requires,
resides, argues, terms
Case Summary
Procedural Posture
Movant, a guardian of an incapacitated veteran, moved
pursuant to Mental Hygiene Law § 81.21 for an order
expanding her powers as guardian and sought the
court's approval in order to effectuate the terms of a
stipulation of settlement. The Department of Veterans'
Affairs (DVA) opposed the motion. The guardian also
sought to transfer the veteran's joint tenancy interest in
the house in which he resided to his mother and brother.
Overview
The DVA asserted that based upon the home and
community-based expenses, the veteran's income was
sufficient to cover these expenses as well as the
estimated cost of the home health care services which
he had been utilizing. While, as the DVA asserted, the
veteran received only 10 hours of care from outside
agencies, he nevertheless required 24 hour per day
care, and the balance of care was being provided to him
by his family members. Because such care could not be
considered to be of infinite duration, the court rejected
the DVA's argument. As the veteran's mother aged and
his sisters and brother aged, at some point in time, they
would no longer be able to provide such services, thus
requiring that Medicaid provide home care services to
him 24 hours per day. The guardian thus adequately
demonstrated that the costs of home health care
services would likely escalate in the future to the point
where the veteran's expenses would exceed his income.
Consequently, it could not be concluded that the veteran
had sufficient income, nor would he in the future, to
privately pay for the costs of home health care services
while at the same time maintaining himself in a home in
the community.
Outcome
The court granted the guardian's motion.
LexisNexis® Headnotes
Military & Veterans Law > Veterans > General
Benefits > Compensation for Service Connected Death &
Disability
Military & Veterans Law > Veterans > Department of
Veterans Affairs
HN1 Pursuant to Mental Hygiene Law § 79.39(a), the
Department of Veterans' Affairs (DVA) may be
recognized as a party in interest on behalf of an
incapacitated person to whom benefits from the DVA
may accrue with respect to benefits from the
administration or the income therefrom.
Public Health & Welfare Law > ... > Medicaid > State
Plans > General Overview
HN2 There is no question that the use of Medicaid
planning by competent persons is legally permissible,
and that proper planning benefits their estates. It has
been held that incapacitated persons, by a court's
authorization of transfers by the incapacitated person's
guardian, should be accorded this same right to engage
in such Medicaid planning. Thus, a guardian is
permitted to effectuate this kind of Medicaid planning on
Page 2 of 7
Eric Lee
behalf of an incapacitated individual pursuant to Mental
Hygiene Law § 81.
Public Health & Welfare Law > ... > Medicaid > State
Plans > General Overview
HN3 While Mental Hygiene Law § 79.03 states that any
inconsistent provisions of general guardianship law of
the State of New York shall be superseded by the
provisions of § 79, no part of § 79 prohibits lawful
Medicaid and estate planning conducted on behalf of a
disabled or incapacitated veteran.
Evidence > Burdens of Proof > Clear & Convincing Proof
Public Health & Welfare Law > ... > Medicaid > State
Plans > General Overview
HN4 A court may approve a transfer of an incapacitated
person's interest in a house only if it is also satisfied by
clear and convincing evidence that a competent,
reasonable individual in the position of the person's
guardian would be likely to perform the asset transfers
under the same circumstances. Mental Hygiene Law §
81.21(e)(2).
Public Health & Welfare Law > ... > Medicaid > State
Plans > General Overview
HN5 Supplemental needs trusts are for the benefit of
incapacitated persons and supplement rather than
supplant government entitlements, thereby enabling the
incapacitated person to enjoy an enhanced quality of
life.
Judges: [*1] Justice Pesce
Opinion by: Pesce
Opinion
Upon the foregoing papers in this Mental Hygiene Law
article 81 proceeding, Yan Shen Li, as guardian of the
person and property of Zhou Ping Li, an incapacitated
person, moves, pursuant to Mental Hygiene Law §
81.21, for an order expanding her powers as guardian,
as follows: (1) authorizing her to execute a deed,
transferring Zhou Ping Li's interest, if any, in and to the
family residence, which is located at 419 61 Street, in
Brooklyn, New York, to his mother, Jin Rong Li, and his
brother, Zhou Zhi Li, (2) approving the stipulation of
Settlement, dated April 29, 2005, entered into between
her and the Human Resources Administration of the
City of New York, Department of Social Services (the
DSS), (3) authorizing her to pay to the DSS the sum of $
100,000 in full settlement of its claim against the estate
of Zhou Ping Li for the period of May 13, 1997 through
February 14, 2005, (4) authorizing her to transfer the
remaining assets in Zhou Ping Li's guardianship
accounts to his mother, Jin Rong Li, and (5) approving
the establishment of an irrevocable supplemental needs
trust for the benefit of Zhou Ping Li, which names her
as [*2] the trustee.
Zhou Ping Li was serving in the United States Navy
before he was involved in an accident, which occurred
on October 26, 1991. As a result of the accident, he
suffered brain damage, which rendered him paralyzed
from the neck down, speechless, and unable to care for
himself. Zhou Ping Li has a mother, a brother, and two
sisters. By order dated January 18, 1994, Zhou Ping Li's
sister, Yan Shen Li, was appointed the guardian of Zhou
Ping Li's person and property. Zhou Ping Li is now 34
years old and his condition is not expected to improve.
He receives various services, including the services of
home attendants 10 hours per day, seven days per
week. The DSS has provided Medicaid benefits to Zhou
Ping Li, which cover the costs of all of these services.
His mother, Jin Rong Li, cares for him overnight (the
remaining 14 hours per day).
According to Yan Shen Li's 2004 annual accounting,
Zhou Ping Li received Veterans' Administration
compensation benefits (VA benefits) in the annual
amount of $ 67,191 and Social Security benefits in the
annual amount of $ 7,044. He also received $ 6,888.98
of interest from bank accounts in that year. As of
December 31, 2004, Zhou Ping Li's estate [*3] has cash
assets in the amount of $ 746,812.85, which consist of
an accumulation of his VA benefits and Social Security
benefits. Zhou Ping Li, by deed dated October 24, 1990,
also holds title as a joint tenant with his mother, Jin
Rong Li, and his brother, Zhou Zhi Li, in the house in
which he presently resides.
On April 18, 2005, the DSS filed an amended proof of
claim, which asserted that the guardianship estate of
Zhou Ping Li is indebted to it for Medicaid granted to
him from May 13, 1997 to February 14, 2005 in the
amount of $ 441,933.35. The DSS claimed that this sum
was an overpayment by it because Zhou Ping Li's cash
assets exceeded its countable resources threshold,
rendering him ineligible for Medicaid coverage during
that time period. By Stipulation of Settlement dated April
29, 2005, entered into and executed by the DSS and
Yan Shen Li, the DSS agreed to fully settle its $
441,933.35 claim against Zhou Ping Li's estate in
200 N.Y. Misc. LEXIS 3 2, *3 2
Page 3 of 7
Eric Lee
consideration of Yan Shen Li's payment to it of $
100,000 from the proceeds of Zhou Ping Li's estate
(which, as noted above, is valued at $ 746,812.85).
Pursuant to the terms of this Stipulation of Settlement,
Yan Shen Li would then transfer the balance [*4] of
Zhou Ping Li's estate to his mother, Jin Rong Li. In
addition, Yan Shen Li would establish a supplemental
needs trust, naming her as the trustee and Zhou Ping Li
as the beneficiary, in the form annexed to such
Stipulation of Settlement. The Stipulation of Settlement
further provides that from the monthly VA benefits and
Social Security benefits which Yan Shen Li receives for
Zhou Ping Li, she would make payments in the amounts
of: (1) the Medicaid monthly income allowance and
disregard for a single person, in such sum as may be in
effect from time to time (presently $ 687 per month) as
and for Zhou Ping Li's room and board, to Zhou Ping
Li's mother, Jin Rong Li, (2) Zhou Ping Li's net
allowance monthly income (NAMI) amount, fixed in the
sum of $ 3,000, to the DSS, and (3) the balance of Zhou
Ping Li's monthly income to the supplemental needs
trust, which is to be used for such lawful, additional
items as he may require. In accordance with these
terms, the DSS represents in the Stipulation of
Settlement that it will make no further claim against
Zhou Ping Li for the Medicaid benefits paid on his behalf
for the period 1993 through February 14, 2005.
Yan Shen Li, by the instant motion, [*5] now seeks the
court's approval, as required under Mental Hygiene Law
§ 81.21, in order to effectuate the terms of the
Stipulation of Settlement. While the DSS has agreed to
and has expressly given its consent to all of the
aforesaid terms of the Stipulation of Settlement, the
Department of Veterans' Affairs (the DVA) opposes Yan
Shen Li's motion for such court approval. Yan Shen Li's
motion also seeks to transfer, by correction deed, his
joint tenancy interest in the house in which he resides to
his mother and brother. The DSS does not oppose this
transfer, but the DVA opposes it.
HN1 Pursuant to Mental Hygiene Law § 79.39 (a), the
DVA may be recognized as a party in interest on behalf
of an incapacitated person to whom benefits from the
DVA may accrue "with respect to benefits from the
administration or the income therefrom." Thus, the DVA
is a party in interest with respect to the terms of the
Stipulation of Settlement since it involves the disposition
of accrued VA benefits and future VA benefit payments.
However, contrary to its assertion, the DVA has no
standing to oppose Yan Shen Li's motion insofar as it
seeks a transfer [*6] of the real property. The house at
issue was purchased by Zhou Ping Li's parents, no
consideration was paid by Zhou Ping Li for the transfer
of an interest to him, which vested prior to his service in
the armed forces, and no VA benefit payments were
used. Thus, no transfer which concerns "benefits from
the [DVA] or the income therefrom" is involved (see
Mental Hygiene Law § 79.39 [a]).
In addressing Yan Shen Li's instant motion, the court
notes that HN2 there is no question that the use of
Medicaid planning by competent persons is legally
permissible, and that proper planning benefits their
estates. It has been held that incapacitated persons, by
a court's authorization of transfers by the incapacitated
person's guardian, should be accorded this same right
to engage in such Medicaid planning (see Matter of
Klapper, NYLJ, Aug. 9, 1994, at 26, col 1 [Sup Ct, Kings
County, Leone J.]). Thus, the Court of Appeals has
established that a guardian is permitted to effectuate
this kind of Medicaid planning on behalf of an
incapacitated individual pursuant to Mental Hygiene Law
article 81 (see Matter of Shah v. DuBuono, 95 N.Y.2d
148, 159, 733 N.E.2d 1093, 711 N.Y.S.2d 824
[2000]; [*7] see also Matter of John XX., 226 A.D.2d 79,
83-84, 652 N.Y.S.2d 329 [1996]; Matter of DiCecco, 173
Misc. 2d 692, 697, 661 N.Y.S.2d 943 [1997]; Matter of
DaRonco, 167 Misc. 2d 140, 142, 638 N.Y.S.2d 275
[1995]; Matter of Daniels, 162 Misc. 2d 840, 844, 618
N.Y.S.2d 499 [1994]; Matter of Parnes, NYLJ, Nov. 2,
1994, at 32, col 2 [Sup Ct, Kings County, Leone, J.];
Matter of Beller [Maltzman], NYLJ, Aug. 31, 1994, at 23,
col 4 [Sup Ct, Kings County, Leone, J.]; Matter of
Goldberg [Ginsberg], NYLJ, Aug. 31, 1994, at 24, col 1
[Sup Ct, Kings County, Leone, J.]; Matter of Klapper,
NYLJ, Aug. 9, 1994, at 26, col 1).
HN3 While Mental Hygiene Law § 79.03 states that any
inconsistent provisions of general guardianship law of
the State of New York shall be superseded by the
provisions of article 79, no part of article 79 prohibits
lawful Medicaid and estate planning conducted on
behalf of a disabled or incapacitated veteran (see Matter
of Michaelson, 162 Misc. 847, 853, 296 N.Y.S. 119
[1937]; Matter of Garmes, 159 Misc. 470, 472, 287
N.Y.S. 52 [1936]). Therefore, there is no inconsistency
with Mental Hygiene Law article 81, and, consequently,
no prohibition against the requested [*8] transfers
merely because Zhou Ping Li is a recipient of VA
benefits.
Pursuant to Mental Hygiene Law § 81.21, the court, in
determining whether to approve this application,
considers that Zhou Ping Li lacks sufficient mental
200 N.Y. Misc. LEXIS 3 2, *3
Page 4 of 7
Eric Lee
capacity to make the proposed dispositions himself (see
Mental Hygiene Law § 81.21 [d] [1], [e] [1]). His disability
is of permanent duration and he, thus, is not likely to
regain such capacity (see Mental Hygiene Law § 81.21
[d] [2], [e] [1]). In addition, the needs of Zhou Ping Li can
be met from the remainder of his assets after the
proposed transfers are made (see Mental Hygiene Law
§ 81.21 [d] [3]). Zhou Ping Li has not manifested an
intention inconsistent with the performance of these
transfers (see Mental Hygiene Law § 81.21 [e] [3]). The
beneficiaries of the proposed transfer of assets, Zhou
Ping Li's mother, and, with respect to the house, his
mother and his brother, are the natural objects of his
bounty (see Mental Hygiene Law § 81.21 [d] [4]). Zhou
Ping [*9] Li's estate also will not incur any tax penalty by
the proposed transfer of assets (see Mental Hygiene
Law § 81.21 [d] [5]).
While the factors above support the granting of Yan
Shen Li's motion, HN4 the court may grant such motion
only if it is also satisfied by clear and convincing
evidence that "a competent, reasonable individual in the
position of [Zhou Ping Li] would be likely to perform
the[se transfers] under the same circumstances"
(Mental Hygiene Law § 81.21 [e] [2]; Matter of Shah, 95
NY2d at 159-160, 733 N.E.2d 1093, 711 N.Y.S.2d 824).
The DVA, in opposing Yan Shen Li's motion, contends
that the proposed estate and Medicaid planning
transfers and establishment of a supplemental needs
trust should be rejected because they are financially
unnecessary and unwarranted and would not be in Zhou
Ping Li's best interests. Specifically, DVA argues that
Zhou Ping Li does not need or require the assistance of
Medicaid in the payment of the home health care
services presently being provided to him because
independently of Medicaid, he should have sufficient
income to pay for these costs, together with his other
expenses, without depleting [*10] his assets.
In support of its argument, the DVA asserts that since
Zhou Ping Li requires 10 hours per day of paid home
care services, based upon a rate of $ 15 per hour, the
annual costs of these services would be $ 54,750 per
year. It states that based upon the home and
community-based expenses set forth in the 2004 annual
accounting of $ 21,641.76, Zhou Ping Li's income of $
81,123.98 in 2004 ($ 67,191 of VA benefits, $ 7,044 of
Social Security benefits, and $ 6,888.98 of interest from
bank accounts) would be sufficient to cover these
expenses as well as the estimated cost of the home
health care services which he has been utilizing. The
DVA asserts that, in addition, the DVA would be willing
to pay the cost of a total of 12 hours per week of non-
institutionalized, non-skilled home care, four hours per
day, three days per week. The DVA, therefore,
concludes that Zhou Ping Li can afford to pay for all of
the services which he presently receives and needs
from him own income, without the need to transfer his
assets in order to preserve them. It argues that the
court, on this basis, should, deny the relief requested by
Yan Shen Li.
The DVA's argument must be rejected. It is
undisputed [*11] that Zhou Ping Li has already received
more than $ 800,000 in Medicaid benefits since
February 13, 1993, and he will continue to require such
services which these benefits covered. If the requested
transfers proposed by Yan Shen Li are effectuated,
Zhou Ping Li would be eligible for Medicaid. While, as
the DVA asserts, Zhou Ping Li presently receives only
10 hours of care from outside agencies, he nevertheless
requires 24 hour per day care, and the balance of such
care is now being provided to him by his family
members. Although Zhou Ping Li's mother and extended
family now are able to provide care for him 14 hours per
day, such care cannot be considered to be of infinite
duration. As Zhou Ping Li's mother ages and his sisters
and brother age, at some point in time, they will no
longer be able to provide such services, thus requiring
that Medicaid provide home care services to him 24
hours per day.
Yan Shen Li's attorney points out that private-pay home
care agency costs for 24-hour per day, live-in home
health aide services conservatively average $ 250 per
day or $ 91,250 per annum, when market rates for
weekend and eight annual days of holiday services are
necessarily included. [*12] Food and additional utilities
expenses incurred by the residence of the companions
must also be incurred. Yan Shen Li's attorney also notes
that the daily cost of Zhou Ping Li's care, if he requires
two home health care aides each day on two 12-hour
shifts, amounts to $ 456 per day or $ 166,000 per
annum. She points to the fact that the total costs of
maintaining an incapacitated person in the community
with 24-hour live-in home care currently averages $
150,000 per annum, and with two companions each on
12-hour shifts, it amounts to more than $ 220,000 per
annum.
As discussed above, Zhou Ping Li's income from his VA
benefits and Social Security benefits presently amounts
to only approximately $ 75,000 per annum. As pointed
out by Yan Shen Li's attorney, if Zhou Ping Li were
required to pay for his own care, invasion of his principal
account each year minimally in the sum of $ 75,000,
200 N.Y. Misc. LEXIS 3 2, *8
Page 5 of 7
Eric Lee
and up to $ 145,000 If he required two 12-hour shifts,
would rapidly reduce the interest earned on his principal
and would fully deplete his principal account.
Additionally, inflation costs can be expected to rise.
Yan Shen Li has thus adequately demonstrated that the
costs of home health care services [*13] will likely
escalate in the future to the point where Zhou Ping Li's
expenses will exceed his income, that his medical
condition is not expected to improve and may
deteriorate over time, and that his mother (who is aging)
and his sisters and brother may not be able to continue
to provide the substantial assistance which they are
presently burdened with providing to him. Consequently,
it cannot be concluded that Zhou Ping Li has sufficient
income, nor will he in the future, to privately pay for the
costs of home health care services while at the same
time maintaining himself in a home in the community,
which would also require that he pay rent, telephone,
electric, heat, food, household and healthcare supplies
(such as diapers), and other equipment.
The DVA, in opposing Yan Shen Li's motion, also
contends that the proposed transfers set forth in the
Stipulation of Settlement should not be approved due to
the fact that Zhou Ping Li has total cash assets of $
746,812.85. It asserts that Zhou Ping Li's estate can,
therefore, pay the DSS its full claim of $ 441,933.35 and
still retain cash assets exceeding $ 300,000. It
speculates that it would not be less advantageous for
the DSS to still [*14] settle its claim for $ 100,000 if the
requested transfers are not made. However, there is no
support for the DVA's speculation that the DSS would, in
fact, do so, particularly in view of the DSS' position that
Zhou Ping Li was not eligible for Medicaid based upon
his possession of these assets, which exceeded its
countable resource threshold. On the other hand, if the
relief requested is not granted, Zhou Ping Li will be
ineligible for continuing Medicaid benefits and services,
the DSS may commence an action against him for the
full amount of the overpayment by it for his care since
May 13, 1997, Zhou Ping Li's estate would be required
to bear the expense of the defense of that action, Zhou
Ping Li would be required to pay for all of his care from
his own funds, and Zhou Ping Li's ability to continue to
provide for himself would be compromised.
"Any person in . . . [Zhou Ping Li's] . . . condition would
prefer that the costs of his care be paid by the State, as
opposed to his family" (Matter of Shah, 95 N.Y.2d at
160, 733 N.E.2d 1093, 711 N.Y.S.2d 824). The court
thus finds that Zhou Ping Li, were he not incapacitated,
would avail himself of estate and Medicaid planning so
that his Medicaid benefits could continue [*15] (see
Mental Hygiene Law § 81.21 [e] [2]).
The DVA further argues that the requested transfers
could jeopardize Zhou Ping Li's interests because of his
loss of his cash assets. Specifically, it asserts that Zhou
Ping Li could be exposed to a penalty period or period
of ineligibility of up to three years in the event that he
should require nursing home placement within three
years from the date of the transfer of his assets. The
DVA speculates that if such contingency should arise,
Zhou Ping Li might not have the ability to pay for such
nursing home costs during the time period in which he
would be rendered ineligible for Medicaid.
The DVA's argument is unavailing. Zhou Ping Li's
prognosis does not indicate that he would require
nursing home placement within three years.
Furthermore, a transfer at this time would start any
penalty period running so that Zhou Ping Li would incur
no waiting period if, in the future, following such time
period, his prognosis should change and worsen. In
contrast, without the approval of the Stipulation of
Settlement and the requested transfers of Zhou Ping Li's
assets, his confinement to a nursing home, if ultimately
required, [*16] would rapidly deplete his estate; proper
Medicaid planning, at this time, would avoid such a
detrimental outcome.
The DVA additionally argues that the proposed transfers
would not be in Zhou Ping Li's best interests on the
basis that if he required private nursing home
placement, his options in selecting a nursing home
might be compromised. The mere existence of a
possibility that this could occur, however, does not
provide a basis to reject the proposed transfers. Zhou
Ping Li may never need private nursing home
placement, and, if such need should arise, he would be
in no worse position than that of numerous other
incapacitated persons who are Medicaid recipients.
The DVA, in opposing Yan Shen Li's motion, also
asserts that if the requested transfers are approved,
Zhou Ping Li would be unable to access new medical
treatments based upon future technological advances
that might improve his condition. There is no showing,
though, that a person covered by Medicaid is denied
access to state of the art medical treatment, and in view
of Zhou Ping Li's current condition and bleak prognosis,
he should not be deprived of his ability to engage in
Medicaid planning based only upon mere
speculation [*17] that there will be some future
technological advancement to improve his condition
200 N.Y. Misc. LEXIS 3 2, *12
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Eric Lee
which he would need private funds to obtain.
The DVA's contention that in order to permit such
Medicaid planning as requested herein, the
incapacitated person must be facing immediate financial
perdition, is without merit. A guardian, on behalf of an
incapacitated person, may engage in Medicaid planning
available to competent individuals so that this outcome
does not arise. Zhou Ping Li need not reach the point of
being in the position where his expenses exceed his
income and all of his cash assets have been completely
exhausted before being able to transfer his funds to
prevent such eventuality and preserve them so that he
will be able to have trust income to pay for his
supplemental needs and comfort while being Medicaid
eligible for his health costs.
Thus, the granting of Yan Shen Li's motion insofar as
the Stipulation of Settlement seeks payment of $
100,000 to the DSS from Zhou Ping Li's estate, is
warranted. Such payment will fully settle and resolve the
DSS' claims against Zhou Ping Li for Medicaid
payments, and a competent, reasonable individual in
Zhou Ping Li's position would likely perform [*18] this
transfer to resolve this claim (see Mental Hygiene Law §
81.21 [e] [2]).
Insofar as Yan Shen Li's motion seeks to transfer the
balance of Zhou Ping Li's assets in his guardianship
accounts to his mother, Jin Rong Li, it is noted that such
a transfer would eliminate any disqualification for
Medicaid benefits based upon Zhou Ping Li's
possession of these cash assets. Since Zhou Ping Li
requires home care, no penalty period of Medicaid
ineligibility would result from the transfer itself.
Consequently, Zhou Ping Li's needs for home health
care, which would be covered by Medicaid, would be
met following the transfer (see Mental Hygiene Law §
81.21 [d] [3]). Additionally, no Federal or State gift taxes
would be required to be paid on such a transfer (see
Mental Hygiene Law § 81.21 [d] [5]). Zhou Ping Li is
unmarried and without children, and as Yan Shen Li's
attorney points out, a strong and pervasive cultural
custom of the Chinese-American community, of which
Zhou Ping Li and his family are members, is a male
son's care and support of his parents, when his parents
are aged, retired, [*19] or unable to work. The donee of
the proposed disposition, Zhou Ping Li's mother, is a
natural object of his bounty (see Mental Hygiene Law §
81.21 [d] [4]). Thus, the transfer of these assets to Zhou
Ping Li's mother should be approved.
To the extent that Yan Shen Li seeks the court's
approval to transfer the balance of Zhou Ping Li's net
monthly income to a supplemental needs trust, to be
used for such supplemental items as Zhou Ping Li may
require, it is noted that an incapacitated person's assets
may be transferred to a supplemental needs trust for his
or her own benefit where such proposed trust complies
with the statutory requirements (see Mental Hygiene
Law § 81.21 [a] [6]; Matter of Goldblatt, 162 Misc. 2d
888, 888, 618 N.Y.S.2d 959 [1994]; Matter of Moretti,
159 Misc. 2d 654, 661, 606 N.Y.S.2d 543 [1993]; Matter
of Morales, NYLJ, July 28, 1995, at 25, col 1 [Sup Ct,
Kings County, Leone, J.]). SuchHN5 supplemental
needs trusts are for the benefit of incapacitated persons,
and supplement rather than supplant government
entitlements, thereby enabling the incapacitated person
to enjoy an enhanced quality of life (see Matter of
Moretti, 159 Misc. 2d at 661, 606 N.Y.S.2d 543). [*20]
Here, Zhou Ping Li's net monthly income from the VA
benefits and Social Security benefits would be paid into
the proposed supplemental needs trust to be used for
such supplemental items as Zhou Ping Li may require.
As proposed, Yan Shen Li, after such transfer, would be
permitted to apply so much of the income and principal
as is necessary for Zhou Ping Li's comfort, well-being,
support, and maintenance so as to provide for his
supplemental needs.
The DVA opposes the establishment of the
supplemental needs trust. It argues that there is no
need for it because Zhou Ping Li would still be paying $
3,000 monthly to the DSS. Such argument is rejected.
The establishment of a supplemental needs trust would
permit Zhou Ping Li to continue to receive Medicaid
benefits and services, while the balance of his monthly
income would be retained so that it could be used for
such additional items as he may require. Here, if Zhou
Ping Li had the capacity to act, it is apparent that he
would create the supplemental needs trust, naming
himself as the beneficiary, to carry out his objective (see
Mental Hygiene Law § 81.21 [e] [2]; Matter of Moretti,
159 Misc. 2d at 661, 606 N.Y.S.2d 543). [*21] Thus, an
order authorizing the establishment of the proposed
supplemental needs trust should be granted (see Mental
Hygiene Law § 81.21 [a] [6]; Matter of Moretti, 159 Misc.
2d at 662, 606 N.Y.S.2d 543).
In support of her motion insofar as it seeks a correction
deed to transfer Zhou Ping Li's joint tenancy interest in
the home in which he resides to his mother and brother,
Yan Shen Li recites that the house was purchased by
her and Zhou Ping Li's parents on October 19, 1989.
They then executed a deed on October 24, 1990, which
200 N.Y. Misc. LEXIS 3 2, *17
Page 7 of 7
Eric Lee
conveyed the property to themselves and to their two
sons, Zhou Ping Li and his brother, Zhou Zhi Li, as joint
tenants. Yan Shen Li asserts that no consideration was
actually given for this transfer, and that no present
interest in the property was intended to be conveyed by
the October 24, 1990 deed. She claims that her parents
were under a misapprehension of the laws of this State,
believing that, in the event of their demise, the property
would be lost if their sons' names did not appear on the
deed. She states that her parents believed that this was
the sole way to provide for their sons' inheritance of the
house, but that it would [*22] not convey a present
interest in the house. Zhou Ping Li's father, Guan Liu Li,
died on September 29, 2000, and his interest in the
house, by operation of law, would have passed to his
wife and Zhou Ping Li's mother, Jin Rong Li, the
surviving joint tenant by the entirety under the original
deed. Yan Shen Li, by her motion, seeks this court's
authorization of a correction deed to relinquish Zhou
Ping Li's interest in the house and effectuate a transfer
to Jin Rong Li, as well as to Zhou Ping Li's brother,
Zhou Zhi Li.
The DVA, in opposing the proposed transfer of the
house, asserts that Zhou Ping Li's parents' alleged
misapprehension of the law is tenuous because an
attorney's name appeared on the deed. As discussed
above, however, the DVA has no standing with respect
to the issue of this transfer and has no personal
knowledge of the events which transpired at the time of
the execution of the deed.
In any event, the court may consider all relevant factors
and approve such a transfer of Zhou Ping Li's interest in
the house where it finds that a competent, reasonable
individual in the position of Zhou Ping Li would be likely
to make such a transfer (see Mental Hygiene Law §
81.21 [d] [6], [*23] [e] [2]; Matter of Shah, 95 N.Y.2d at
159-160, 733 N.E.2d 1093, 711 N.Y.S.2d 824). Here,
Zhou Ping Li's mother and brother are the natural
objects of his bounty (see Mental Hygiene Law § 81.21
[d] [4]). The family wishes to list the real property for
sale so that premises in a safer neighborhood may be
purchased for the comfort of Zhou Ping Li and the
family, and so that the new home may be equipped to
provide Zhou Ping Li with space on the ground floor,
which will make it possible for him to be taken out of the
home at less risk. He presently resides in the second
floor of the house and two family members must carry
him down a flight of 13 steps in order to bring him out of
the house. Yan Shen Li asserts that this dangerous
situation has precipitated the need to sell this home and
purchase a more appropriate home in which they can all
reside.
Therefore, since Yan Shen Li has demonstrated that the
sale of the house is necessary to replace it with one
which is handicapped accessible and better suited for
the benefit and comfort of Zhou Ping Li, and which
would meet his needs and optimize his situation, the
court is satisfied, by the clear and convincing
evidence [*24] submitted, that a competent, reasonable
individual in the position of Zhou Ping Li would likely
make this transfer under the same circumstances (see
Mental Hygiene Law § 81.21 [e] [2]). Thus, the approval
of this transfer may be granted.
Therefore, inasmuch as the facts herein meet the
scrutiny of the standards set forth in Mental Hygiene
Law § 81.21 (e), an order approving the Stipulation of
Settlement, the requested asset transfers, the
establishment of a supplemental needs trust, and the
transfer of Zhou Ping Li's interest in the house, is
warranted (see Matter of Shah, 95 N.Y.2d at 159-160,
733 N.E.2d 1093, 711 N.Y.S.2d 824; Matter of John
XX., 226 A.D.2d at 82-84; Matter of DaRonco, 167 Misc.
2d at 142; Matter of Daniels, 162 Misc. 2d at 848; Matter
of Klapper, NYLJ, Aug. 9, 1994, at 26, col 1; Matter of
Moretti, 159 Misc. 2d at 662, 606 N.Y.S.2d 543).
Consequently, Yan Shen Li's motion must be granted in
its entirety.
Accordingly, Yan Shen Li's motion is granted.
This constitutes the decision, order, and judgment of the
court.
End of Document
200 N.Y. Misc. LEXIS 3 2, *21
Eric Lee
No Shepard’s Signal™
As of: November 18, 2016 1:26 PM EST
In re SMITH
Surrogate's Court of New York, Suffolk County
December 18, 2006
No Number in Original
Reporter
2006 N.Y. Misc. LEXIS 4340 *; 236 N.Y.L.J. 116
MATTER OF ROBERT JOHN SMITH, PETITIONER, A
DISABLED PERSON, FOR AN ORDER
ESTABLISHING A FIRST-PARTY SUPPLEMENTAL
NEEDS TRUST FOR HIS BENEFIT PURSUANT TO
EPLT § 7-1.12
Core Terms
supplemental, indenture, further ordered, self-settled,
irrevocable, Disability, ineligible, benefits, conform, days
Judges: [*1] Surrogate Czygier
Opinion by: Czygier
Opinion
This is a proceeding by petitioner for authorization to
create a self-settled supplemental needs trust. While he
suffers from a physically debilitating illness, Petitioner
asserts that he is competent to handle his own affairs.
Pursuant to the allegations set forth in his petition,
robert John Smith is permanently disabled, and he
currently receives Social Security Disability payments
and has filed an application to receive Medicaid
benefits. Petitioner is also the plaintiff in a personal
injury action, and the receipt of proceeds from such
action could make him ineligible to receive government
entitlements. In addition, petitioner's father, Robert John
roth, died on January 5, 2002, and amount held for
petitioner's benefit in a testamentary trust may make
petitioner ineligible for Medicaid benefits. Thus,
Petitioner is asking the court to establish the
supplemental needs trust for his benefit (see, Matter of
Gillette, 195 Misc2d 89; matter of Kennedy, 3 Misc2d
907).
EPTL 7-1.12, Social Services Law § 366(2)(b)(2)(III)
and 42 USC § 1396p(d)(4)(A) [*2] allow a supplemental
needs trust to be self-settled provided a court of
competent jurisdiction has authorized the same prior to
the execution of the indenture (see, Gellette, Supra).
Here, Petitioner has submitted an unexecuted copy of
the irrevocable supplemental needs trust. With the
court's permission, petitioner will be the settler of the
trust and his sister, Judy Pepitone, will serve as trustee.
further application to the court shall be made if there is a
need to appoint a successor trustee. The provision of
the trust tend to conform to EPTL 7-1.12 and otherwise
tend to conform with present federal and state law.
The Court notes, however, that it has found two
typographical errors, a reference to petitioner's age in
Article I(E), and a reference in Article IV(A)(4)(a) to
"Supreme Court" when such reference should properly
be to "Surrogate's Court." These corrections to the
proposed trust should be made.
Jurisdiction has been obtained over all necessary
parties including the Department of Social Services. No
Opposition having been made to the relief requested by
petitioner, it is
ORDERED that the "Robert John Smith Special Needs
Trust," as modified [*3] by this decision and order, is
approved and authorized by the court as an irrevocable
supplemental needs trust for the benefit of Robert John
Smith, and it is further
ORDERED, that the proposed trustee is directed to file
her oath and designation, as trustee, with this court
within thirty (30) days of the execution of the trust
indenture, and it is further
ORDERED, that the petitioner file a copy of the
executed trust indenture with this court, with complies
with this decision and order, within thirty (30) days of the
date hereof.
Page 2 of 2
Eric Lee
End of Document
2006 N.Y. Misc. LEXIS 4340, *3
Eric Lee
Cited
As of: November 18, 2016 1:06 PM EST
In re FIORILLO
Surrogate's Court of New York, New York County
October 12, 2005
No Number in Original
Reporter
2005 N.Y. Misc. LEXIS 4704 *; 234 N.Y.L.J. 71
MATTER OF DAVID FIORILLO
Core Terms
beneficiary, corpus, medical assistance, trust
instrument, requirements, supplemental, provisions
Judges: [*1] Surrogate Preminger
Opinion by: Preminger
Opinion
Petitioner seeks to create an irrevocable supplemental
needs trust (SNT), pursuant to EPTL § 7-1.12, for his
own benefit, and has submitted a proposed trust
instrument for the approval of the court. Petitioner
suffers from various physiological and neurological
disabilities, but has mental capacity, and requires
government medical assistance. He intends to fund the
trust with proceeds of an annuity that was established
by his deceased father. The Department of Social
Services of the City of New York appeared and objected
to various provisions of the trust instrument, but those
have all been resolved, except for one: the necessity of
a bond.
The court reviews a proposed, first-party or self-settled
SNT to determine whether its provisions comply with the
relevant statutory requirements and case law and
whether the interests of the beneficiary are protected
(EPTL 7-1.12[a][5]; SSL § 366 [2][b][2][iii][A]; 42 UCS §
1396p[d][4][A]; SCPA § 207; Mental Hygiene Legal
Service ex rel Thomas C. V. Bishop, 298 AD2d 644, 646
[2002]; Matter of Goldblatt, 162 Misc.2d 888, 890
[1994]; Matter of Gillette, 195 Misc2d 89 [*2] [2003];
Matter of Chase, NYLJ, Dec. 8, 2004, at 27, col 2). The
court finds that it does so here. As required, the
proposed SNT provides that the Department of Social
Services will receive all amounts remaining in the trust
upon the death of the beneficiary, up to an amount
equal to the total medical assistance paid to the
beneficiary during his lifetime. The SNT is in the
interests of the incapacitated person, since he depends
on governmental benefits and assistance, and the
creation of the SNT will preserve his eligibility, and it
otherwise appears to be in his best interest.
The remaining issue for the court's determination is the
posting of a bond. DSS regulations, specifically 18
NYCRR § 360-4.5(b)(5)(iii)(e), require the trustee to
provide proof of bonding if the trust corpus is over $
1,000,000, unless waived by a court or "if the assets of
the trust are less than $ 1,000,000, if required" by the
court. Here the corpus is far less than $ 1,000,000, and
is closer to $ 100,000. Nonetheless, and despite the
existence of some other safeguards in the proposed
SNT, the court will require a bond only for the value of
the corpus, not, as requested by DSS, for 110 percent
of its [*3] value. This requirement is without prejudice to
the ability of the trustee to seek, at a later time, to be
relieved, of this requirement.
Accordingly, the court approves and establishes the
supplemental needs trust for the benefit of David
Fiorillo, with the proviso that the trustee post a bond as
set forth in this decision.
Settle decree.
End of Document
Eric Lee
Positive
As of: November 18, 2016 1:36 PM EST
Estate of Judith N. Doman
Surrogate's Court of New York, Suffolk County
October 6, 2008
No Number in Original
Reporter
2008 N.Y. Misc. LEXIS 6314 *; 240 N.Y.L.J. 68
ESTATE OF JUDITH N. DOMAN a/k/a JUDITH
DOMAN, Deceased (1029P/06)
Subsequent History: Affirmed by Matter of Doman, 68
A.D.3d 862, 890 N.Y.S.2d 632, 2009 N.Y. App. Div.
LEXIS 9076 (N.Y. App. Div. 2d Dep't, 2009)
Subsequent appeal at Matter of Doman, 110 A.D.3d
1073, 973 N.Y.S.2d 782, 2013 N.Y. App. Div. LEXIS
6985 (N.Y. App. Div. 2d Dep't, 2013)
Core Terms
cooperative, apartment, decedent, void ab initio,
invalidate, funding, grounds, statute of limitations,
documents, issues
Judges: [*1] Surrogate Czygier
Opinion by: Czygier
Opinion
Before the court is a pre-answer motion to dismiss
petition to invalidate captioned decedent's trust,
pursuant to CPLR 3211(a)(1), (5) and (7). For the
reasons set forth herein, the motion is granted.
Background
This petitioner had previously sought to bring a
proceeding to invalidate an inter vivos trust created by
subject decedent. She is one of two of the children of
decedent's first marriage. By decision/order, dated June
26, 2007, this court granted a pre-answer motion to
dismiss said proceeding on the grounds that petitioners
therein lacked standing. The remaining grounds for the
motion were not addressed in the prior decision.
An inter vivos created by decedent and dated August
24, 1998 (QPRT), was to have been funded with shares
in a cooperative corporation and propriety lease for the
Fifth Avenue (New York City) apartment in which
subject decedent and her husband (Nicholas) resided.
Subject decedent (Judith) continued to reside there after
Nicholas' death on January 25, 2004, until the
apartment was sold in 2004 for $ 1,610,000. Judith and
Paul Green were co-trustees of the QPRT. The trust
terms provide for its conversion to a Qualified Annuity
Trust [*2] (QAT) should it cease to qualify as a QPRT;
this conversion has taken place. Judith died on May 5,
2006, and her will, dated April 7, 2006 whereupon
letters testamentary issued to Paul Green. Upon the
trust's termination, the remainder is payable to the
Doman Home Trust of which Alexander Doman
(Nicholas' son from a prior marriage) is trustee. None of
the beneficiaries of the Doman Home Trust are Judith's
heirs.
Petitioner then brought an application for limited letters,
stating that she wished to bring a proceeding to
invalidate the QPRT/QAT on the grounds (1) that the
trust was void ab initio because the trust res was not
owned by Judith when the QPRT was established, (2)
that the establishment of the trust was the result of fraud
and duress, and (3) that Judith executed the trust
without the advice of independent counsel. The
application for limited letters was granted on January
18, 2008, over the objections filed by Alexander Doman,
successor co-trustee of the QPRT and resulting QAT.
In the aforementioned decision granting the application
for limited letters, it was noted that inquiry on such
application, pursuant to SCPA 702(9), is limited to
whether there is a proper party who [*3] could bring the
alleged claim, and that the executor of Judith's estate
was not in a position to bring a proceeding against
himself as trustee of the trust at issue. The court
directed petitioner to make the co-executors of Nicholas'
estate parties to the anticipated proceeding to invalidate
the referenced trust. The court also opined that , while
Page 2 of 3
Eric Lee
there may be factual issues with respect to petitioner's
position that the trust was void ab initio, the viability of
fraud claims was doubtful and a strong argument for
ratification was indicated.
The proceeding to invalidate the subject trust has now
been brought and, as indicated, a pre-answer motion to
dismiss same is before the court. The grounds asserted
in the petition include, inter alia, (1) that the trust was
void ab initio, (2) that the establishment of the trust was
the result of fraud, duress and under influence, and (3)
that Judith executed the trust without the advice of
independent counsel.
Arguments
In support of the motion to dismiss the petition, counsel
for respondents points to the numerous documents
executed by both Nicholas and Judith to effect the
transfer of the title of the cooperative apartment tot he
trust, including, [*4] but not limited to: an assignment of
the cooperative apartment's proprietary lease from
Nicholas to Judith on August 22, 1998, which it appears
was redrafted and executed on January 29, 1999,
possibly at the behest of the cooperative association; an
assignment of same on January 29, 1999 from Judith to
the trustees of the QPRT; an occupancy and
assignment agreement executed by Judith and Nicholas
on August 28, 1998, which recited that it was binding on
the couple's heirs and assigns; and a consent to the
assignment executed by the president of the
cooperative's board in his official capacity on March 4,
1999.; He also notes that Judith filed a gift tax return,
stating the date of the gift as August 24, 1998; that she
received trustee's commissions on the sale of the
apartment by the trust; and that she received annual
commissions and annuity payments between 1998 and
2006. With respect to the petitioner's position that the
trust was void ab initio, counsel for respondents argues
that the date of funding is irrelevant as regards the
trust's validity, and that Judith recognized the trust and
accepted its benefits from its inception until her death.
He also argues that the petition should [*5] be
dismissed on statute of limitations grounds, pursuant to
CPLR 213(8), since Judith had ample time within which
to commence an action with the applicable period and
chose not to do so. Further, respondents' counsel notes
that any allegation of fraud in the pleading before the
court are either not sufficiently specific or non-existent. It
is also respondents' position that there is no trust, unjust
enrichment or injunctive relief under the facts of this
case; and that the doctrines of collateral estoppel and
res judicata bar any potential recovery petitioner may
seek herein, since issues concerning fraud, duress and
undue influence have already been litigated in the
context of proceedings concerning a post nuptial
agreement affecting subject decedent's estate.
In opposition to the motion, petitioner argues that the
documents establishing the transfers of the cooperative
apartment are suspect and discovery is necessary to
resolve the purported factual issues raised by the
alleged inconsistencies in said documents. Petitioner
contends that the fact that Judith did not own the
cooperative apartment on the date the trust was created
voids the trust; a situation which cannot be altered
[*6] by principles or estoppel or ratification. Petitioner
also posits that Nicholas' alleged fraudulent
misrepresentations (i.e. keeping the specifics of the
trust's operation and import from Judith) continued until
his death; and that a resulting trust and injunctive relief
are the only ways to adequately compensate Judith's
estate for the alleged malfeasances. In addition, it is
argued that a constructive trust lies because, inter alia,
Nicholas' estate plan benefitted at the expense of
Judith's estate plan. Finally, petitioner contends that
there is no identity of issues which would allow for
application of the doctrines of collateral estoppel and/or
res judicata.
Discussion
The criterion the court employs when deciding a motion
to dismiss for failure to state a cause of action, pursuant
to CPLR 3211(a)(7), is whether the petitioner, having
been given the benefit of every favorable inference, has
a cause of action (Guggenheimer v. Ginzburg, 43 NY2d
268, 275; Fast Track Funding Corp. v. Perrone, 19
AD3d 362).
Although petitioner attacks the subject QPRT/QAT on a
number of fronts, the primary argument asserted is that
the trust was void ab initio. The focus for this assertion
is that Judith [*7] did not won the property on the day
that the trust was created and, consequently, the trust
was no funded with the cooperative apartment shares
until some months after the trust's execution. A careful
review of suggest that the argument is framed more in
terms of the allegation that Judith did not own the
property on the date the trust was executed, therefore
no trust, according to petitioner, was formed or could
take effect.
As this court has recognized and as petitioner has
argued, the validity of an express trust has historically
been determined by (1) the identification of a designated
2008 N.Y. Misc. LEXIS 6314, *3
Page 3 of 3
Eric Lee
beneficiary; (2) a designated trustee, who was not the
beneficiary; (3) a fund or property sufficiently identifiable
to enable title to be transferred to the trustee(s); and (4)
legal assignment or actual delivery of the fund or
property to the trustee(s) with the intention of passing
legal title (Matter of Hird, 10/2/2003 NYLJ 29 (col. 1);
citing, Matter of Hunt, 4/12/2002, NYLJ 21 (col. 5);
Brown v. Spohr, 180 NY 201). This court also relies
upon the language used in EPTL 7-1.18, which provides
that "[a] lifetime trust shall be valid as to any assets
therein to the extent the assets have been transferred
[*8] to the trust." Recognizing that simply attaching a
schedule which recites that certain assets belong to a
trust is not sufficient (Estate of Rothwell, 189 Misc.2d
191), the comparison between the case before the court
and the relevant case law diminishes petitioner's
position. The case before the court does not concern a
mere expectancy or hope of inheritance with respect to
the specific property at issue (See, Marx v. Marx, 5
Misc.2d 42; citing, Hickok v. Bunting, 67 App. Div. 560).
On all material points, there is no dispute as to the facts
leading up to the Judith's eventual denomination as
trustee and beneficiary of the subject trust. These facts
indicate that the ultimate design was the result of an
ongoing process that, due tot he nature of the property
involved and the various ministerial steps necessary to
effectuate the transfer, played itself out over the course
of some months. During this time, there was no
deviation by any of the parties from this course, the
consequence of which was Judith eventually deriving
the benefit of the property funding the trust. The
outcome was not the result of happenstance. Indeed,
Judith's deliberate participation in the process was
confirmed [*9] by her subsequent participation in
converting the trust from a QPRT to a QAT.
An assignment of the cooperative apartment's
proprietary lease from Nicholas to Judith on August 22,
1998 was, apparently, redrafted and executed again in
January, 1999. An occupancy and assignment
agreement, dated August 28, 1998, which appears to
have been acknowledged in January and March of 1999
contains the cooperative board president's consent to
the transfer of shares to the trust. These are two of the
documents petitioner relies upon to support her
argument that the irregularities therein require discovery
to resolve outstanding factual issues. These are,
however, but two amongst a number of documents
indicating a series of transactions designed to effectuate
the funding of the trust at issue in accordance with the
agreement of the parties. In reliance on the above-
quoted language in EPTL 7-1.8, even were the court to
inquire, at petitioner's urging, into the reasons behind
the delay in obtaining the signature of the cooperative
association's president, for instance, none of these
alleged irregularities appear to void the trust.
Assuming the trust is not void ab initio, petitioner's
remaining arguments [*10] must fail on both ratification
and statute of limitations grounds.
First, no cause of action lies for a constructive trust
under the elements enunciated by Sharp v. Kosmalski,
40 NY2d 119, as the circumstances before the court do
not fall within the standard established therein.
Second, Judith's action from the inception of the trust
until 2006 were consistent with one who was aware of
the trust and accepted its benefits in all their forms,
including commissions and annuities, thus ratifying its
terms (Kazqaras v. Manufactuers Trust Company, 4
AD2d 227).
Third, although not before the court on this application,
the same reasons for applying the bar of the statute of
limitations to the application concerning the post-nuptial
agreement between Nicholas and Judith exist here; to
wit, even if petitioner could establish that Judith was
unable to ascertain the alleged fraud during the initial six
years of the applicable statute of limitations there is no
indication that Judith was prevented from discovering
such fraud prior to the expiration of the statute of
limitations, certainly not during the more than two years
after Nicholas' death (Estate of Nicholas Doman, File
#313P2004 and Estate [*11] of Judith N. Doman a/k/a
Judith Doman, File #1029P2006, 6/26/2007, S. Czygier;
citing In re Neidich, 290 AD2d 557; see also, Estate of
Blake, 282 AD2d 905 for the proposition that an action
sounding in fraud must be commenced with six years of
the date of execution or within two years of the date
when such fraud could reasonably have been
discovered). Again, her fiduciary must be bound by
Judith's actions, as well as her failure to act.
Accordingly, it is
ORDERED that the motion to dismiss the petition to
invalidate the inter vivos trust, dated August 24, 1998,
referenced herein is granted.
End of Document
2008 N.Y. Misc. LEXIS 6314, *7