Appellate Division Rules Counsel Fee Award is Discretionary, and May Be Reversed on Appeal “Only on the Rarest of Occasions”

In an appeal from a trial court's decision to reduce the counsel fees sought by a litigant, the appellate division ruled that counsel fees, awarded to both proponent and contestant in a will dispute at the discretion of the trial court, are disturbed on appeal “only on the rarest of occasions.” In re Estate of Riordan, Docket No. A-5286-12T1 (App. Div., May 13, 2015)

Agnes Riordan (“decedent”), who died in 2012, was survived by five adult sons. In her will, the decedent devised her residuary estate to her five sons in equal shares.

While administering the estate, the executor discovered 17 U.S. savings bonds as well as handwritten notes by the decedent indicating that the bonds were left to her grandchildren. When the executor notified the sons about the bonds and their mother's handwritten note, three of the sons asked that the bonds be distributed to the grandchildren, while the other two demanded they pass under the residuary clause in the decedent's will to all five sons.

Confronted with this divergence of opinion among the beneficiaries, the executor filed a verified complaint seeking instructions from the court. Two of the decedent's sons, John Riordan and Thomas Riordan, filed answers demanding the bonds pass through the residuary estate. Decedent's grandchildren filed an answer requesting that the bonds pass to them. After the parties engaged in limited discovery, the court ruled that the bonds were to pass under the residuary clause in the decedent's will to her five sons.

Counsel for John Riordan and for the grandchildren filed court applications seeking awards of counsel fees to be paid from the estate. The fees sought by John Riordan's counsel totaled $5355 based on a $350 hourly rate and sought $110 in costs. No one objected to the application or the amount sought. After considering the submissions, the court awarded fees in the amount of $3170, based on an hourly rate of $200 per hour.

John Riordan's counsel filed a motion for reconsideration. Again, no one opposed the motion. John Riordan's counsel argued that the court improperly applied its own policy considerations, those of “discouraging or deterring” fee-shifting cases, in determining the award. Counsel also noted that the Chancery judge had been awarding a $200 hourly fee in similar estate litigation and probate matters for more than 12 years, and the hourly rate had not kept pace with inflation.

After considering these arguments, the court denied the reconsideration motion. The court explained that the fee reduction was not the result of its own policy considerations. Rather, the court gave five reasons for the fee reduction: (1) the rate is considered to be on the high end of what is reasonable in the Ocean County area; (2) the court did not find that the matter was overly complex; (3) John Riordan's attorneys' services were already being performed by the executor, an attorney who had “equal, if not greater, experience” than John Riordan's counsel; (4) the amount in dispute was limited to the value of the bonds, which was $89,000; and, (5) John Riordan's counsel did not provide the court with a copy of an agreement with his client establishing an hourly rate, as required.

John Riordan appealed, challenging the amount of the counsel fees awarded by the Chancery judge. The Appellate Division affirmed.

The Appellate Division noted first that the rules in New Jersey allow for an award of counsel fees in probate actions at the discretion of the trial court, that a trial court will normally allow counsel fees to both proponent and contestant in a will dispute, and that counsel fees awarded by a trial court are disturbed on appeal “only on the rarest of occasions.” The appeals court further noted that

[A] reasonable hourly rate is to be calculated according to the prevailing market rates in the relevant community. Thus, the court should assess the experience and skill of the prevailing party's attorneys and compare their rates to the rates prevailing in the community for similar services by lawyers of reasonably comparable skill, experience, and reputation. … [A] trial court may [then] delete excessive hours from its calculation. A court [may also] reduce the … fee if the level of success achieved in the litigation is limited as compared to the relief sought.

The Appellate Division agreed that a trial judge's award of counsel fees should not be based on a judge's personal policy considerations. However, the appeals court concluded that personal policy considerations did not motivate the judge in this case as the judge identified the specific factors that led to his decision. Thus, the appeals court affirmed, finding no abuse of discretion in the trial judge's decision to limit the hourly rate and reduce the attorneys fee awarded to John Riordan's counsel.

The Riordan case is annexed here – In re Estate of Riordan, Docket No. A-5286-12T1 (App. Div. May 13, 2015)

For additional information concerning probate litigation and will contests, visit: http://vanarellilaw.com/will-contests-probate-litigation-elder-abuse-actions/#iplwc

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Appellate Division Rules Counsel Fee Award is Discretionary, and May Be Reversed on Appeal “Only on the Rarest of Occasions”

In an appeal from a trial court's decision to reduce the counsel fees sought by a litigant, the appellate division ruled that counsel fees, awarded to both proponent and contestant in a will dispute at the discretion of the trial court, are disturbed on appeal “only on the rarest of occasions.” In re Estate of Riordan, Docket No. A-5286-12T1 (App. Div., May 13, 2015)

Agnes Riordan (“decedent”), who died in 2012, was survived by five adult sons. In her will, the decedent devised her residuary estate to her five sons in equal shares.

While administering the estate, the executor discovered 17 U.S. savings bonds as well as handwritten notes by the decedent indicating that the bonds were left to her grandchildren. When the executor notified the sons about the bonds and their mother's handwritten note, three of the sons asked that the bonds be distributed to the grandchildren, while the other two demanded they pass under the residuary clause in the decedent's will to all five sons.

Confronted with this divergence of opinion among the beneficiaries, the executor filed a verified complaint seeking instructions from the court. Two of the decedent's sons, John Riordan and Thomas Riordan, filed answers demanding the bonds pass through the residuary estate. Decedent's grandchildren filed an answer requesting that the bonds pass to them. After the parties engaged in limited discovery, the court ruled that the bonds were to pass under the residuary clause in the decedent's will to her five sons.

Counsel for John Riordan and for the grandchildren filed court applications seeking awards of counsel fees to be paid from the estate. The fees sought by John Riordan's counsel totaled $5355 based on a $350 hourly rate and sought $110 in costs. No one objected to the application or the amount sought. After considering the submissions, the court awarded fees in the amount of $3170, based on an hourly rate of $200 per hour.

John Riordan's counsel filed a motion for reconsideration. Again, no one opposed the motion. John Riordan's counsel argued that the court improperly applied its own policy considerations, those of “discouraging or deterring” fee-shifting cases, in determining the award. Counsel also noted that the Chancery judge had been awarding a $200 hourly fee in similar estate litigation and probate matters for more than 12 years, and the hourly rate had not kept pace with inflation.

After considering these arguments, the court denied the reconsideration motion. The court explained that the fee reduction was not the result of its own policy considerations. Rather, the court gave five reasons for the fee reduction: (1) the rate is considered to be on the high end of what is reasonable in the Ocean County area; (2) the court did not find that the matter was overly complex; (3) John Riordan's attorneys' services were already being performed by the executor, an attorney who had “equal, if not greater, experience” than John Riordan's counsel; (4) the amount in dispute was limited to the value of the bonds, which was $89,000; and, (5) John Riordan's counsel did not provide the court with a copy of an agreement with his client establishing an hourly rate, as required.

John Riordan appealed, challenging the amount of the counsel fees awarded by the Chancery judge. The Appellate Division affirmed.

The Appellate Division noted first that the rules in New Jersey allow for an award of counsel fees in probate actions at the discretion of the trial court, that a trial court will normally allow counsel fees to both proponent and contestant in a will dispute, and that counsel fees awarded by a trial court are disturbed on appeal “only on the rarest of occasions.” The appeals court further noted that

[A] reasonable hourly rate is to be calculated according to the prevailing market rates in the relevant community. Thus, the court should assess the experience and skill of the prevailing party's attorneys and compare their rates to the rates prevailing in the community for similar services by lawyers of reasonably comparable skill, experience, and reputation. … [A] trial court may [then] delete excessive hours from its calculation. A court [may also] reduce the … fee if the level of success achieved in the litigation is limited as compared to the relief sought.

The Appellate Division agreed that a trial judge's award of counsel fees should not be based on a judge's personal policy considerations. However, the appeals court concluded that personal policy considerations did not motivate the judge in this case as the judge identified the specific factors that led to his decision. Thus, the appeals court affirmed, finding no abuse of discretion in the trial judge's decision to limit the hourly rate and reduce the attorneys fee awarded to John Riordan's counsel.

The Riordan case is annexed here – In re Estate of Riordan, Docket No. A-5286-12T1 (App. Div. May 13, 2015)

For additional information concerning probate litigation and will contests, visit: http://vanarellilaw.com/will-contests-probate-litigation-elder-abuse-actions/#iplwc

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Appellate Division Rules Counsel Fee Award is Discretionary, and May Be Disturbed on Appeal “Only on the Rarest of Occasions”

In an appeal from a trial court's decision to reduce the counsel fees sought by a litigant, the appellate division ruled that counsel fees, awarded to both proponent and contestant in a will dispute at the discretion of the trial court, are disturbed on appeal “only on the rarest of occasions.” In re Estate of Riordan, Docket No. A-5286-12T1 (App. Div., May 13, 2015)

Agnes Riordan (“decedent”), who died in 2012, was survived by five adult sons. In her will, the decedent devised her residuary estate to her five sons in equal shares.

While administering the estate, the executor discovered 17 U.S. savings bonds as well as handwritten notes by the decedent indicating that the bonds were left to her grandchildren. When the executor notified the sons about the bonds and their mother's handwritten note, three of the sons asked that the bonds be distributed to the grandchildren, while the other two demanded they pass under the residuary clause in the decedent's will to all five sons.

Confronted with this divergence of opinion among the beneficiaries, the executor filed a verified complaint seeking instructions from the court. Two of the decedent's sons, John Riordan and Thomas Riordan, filed answers demanding the bonds pass through the residuary estate. Decedent's grandchildren filed an answer requesting that the bonds pass to them. After the parties engaged in limited discovery, the court ruled that the bonds were to pass under the residuary clause in the decedent's will to her five sons.

Counsel for John Riordan and for the grandchildren filed court applications seeking awards of counsel fees to be paid from the estate. The fees sought by John Riordan's counsel totaled $5355 based on a $350 hourly rate and sought $110 in costs. No one objected to the application or the amount sought. After considering the submissions, the court awarded fees in the amount of $3170, based on an hourly rate of $200 per hour.

John Riordan's counsel filed a motion for reconsideration. Again, no one opposed the motion. John Riordan's counsel argued that the court improperly applied its own policy considerations, those of “discouraging or deterring” fee-shifting cases, in determining the award. Counsel also noted that the Chancery judge had been awarding a $200 hourly fee in similar estate litigation and probate matters for more than 12 years, and the hourly rate had not kept pace with inflation.

After considering these arguments, the court denied the reconsideration motion. The court explained that the fee reduction was not the result of its own policy considerations. Rather, the court gave five reasons for the fee reduction: (1) the rate is considered to be on the high end of what is reasonable in the Ocean County area; (2) the court did not find that the matter was overly complex; (3) John Riordan's attorneys' services were already being performed by the executor, an attorney who had “equal, if not greater, experience” than John Riordan's counsel; (4) the amount in dispute was limited to the value of the bonds, which was $89,000; and, (5) John Riordan's counsel did not provide the court with a copy of an agreement with his client establishing an hourly rate, as required.

John Riordan appealed, challenging the amount of the counsel fees awarded by the Chancery judge. The Appellate Division affirmed.

The Appellate Division noted first that the rules in New Jersey allow for an award of counsel fees in probate actions at the discretion of the trial court, that a trial court will normally allow counsel fees to both proponent and contestant in a will dispute, and that counsel fees awarded by a trial court are disturbed on appeal “only on the rarest of occasions.” The appeals court further noted that

[A] reasonable hourly rate is to be calculated according to the prevailing market rates in the relevant community. Thus, the court should assess the experience and skill of the prevailing party's attorneys and compare their rates to the rates prevailing in the community for similar services by lawyers of reasonably comparable skill, experience, and reputation. … [A] trial court may [then] delete excessive hours from its calculation. A court [may also] reduce the … fee if the level of success achieved in the litigation is limited as compared to the relief sought.

The Appellate Division agreed that a trial judge's award of counsel fees should not be based on a judge's personal policy considerations. However, the appeals court concluded that personal policy considerations did not motivate the judge in this case as the judge identified the specific factors that led to his decision. Thus, the appeals court affirmed, finding no abuse of discretion in the trial judge's decision to limit the hourly rate and reduce the attorneys fee awarded to John Riordan's counsel.

The Riordan case is annexed here – In re Estate of Riordan, Docket No. A-5286-12T1 (App. Div. May 13, 2015)

For additional information concerning probate litigation and will contests, visit: http://vanarellilaw.com/will-contests-probate-litigation-elder-abuse-actions/#iplwc

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Appellate Division Rules Counsel Fee Award is Discretionary, and May Be Disturbed on Appeal “Only on the Rarest of Occasions”

In an appeal from a trial court's decision to reduce the counsel fees sought by a litigant, the appellate division ruled that counsel fees, awarded to both proponent and contestant in a will dispute at the discretion of the trial court, are disturbed on appeal “only on the rarest of occasions.” In re Estate of Riordan, Docket No. A-5286-12T1 (App. Div., May 13, 2015)

Agnes Riordan (“decedent”), who died in 2012, was survived by five adult sons. In her will, the decedent devised her residuary estate to her five sons in equal shares.

While administering the estate, the executor discovered 17 U.S. savings bonds as well as handwritten notes by the decedent indicating that the bonds were left to her grandchildren. When the executor notified the sons about the bonds and their mother's handwritten note, three of the sons asked that the bonds be distributed to the grandchildren, while the other two demanded they pass under the residuary clause in the decedent's will to all five sons.

Confronted with this divergence of opinion among the beneficiaries, the executor filed a verified complaint seeking instructions from the court. Two of the decedent's sons, John Riordan and Thomas Riordan, filed answers demanding the bonds pass through the residuary estate. Decedent's grandchildren filed an answer requesting that the bonds pass to them. After the parties engaged in limited discovery, the court ruled that the bonds were to pass under the residuary clause in the decedent's will to her five sons.

Counsel for John Riordan and for the grandchildren filed court applications seeking awards of counsel fees to be paid from the estate. The fees sought by John Riordan's counsel totaled $5355 based on a $350 hourly rate and sought $110 in costs. No one objected to the application or the amount sought. After considering the submissions, the court awarded fees in the amount of $3170, based on an hourly rate of $200 per hour.

John Riordan's counsel filed a motion for reconsideration. Again, no one opposed the motion. John Riordan's counsel argued that the court improperly applied its own policy considerations, those of “discouraging or deterring” fee-shifting cases, in determining the award. Counsel also noted that the Chancery judge had been awarding a $200 hourly fee in similar estate litigation and probate matters for more than 12 years, and the hourly rate had not kept pace with inflation.

After considering these arguments, the court denied the reconsideration motion. The court explained that the fee reduction was not the result of its own policy considerations. Rather, the court gave five reasons for the fee reduction: (1) the rate is considered to be on the high end of what is reasonable in the Ocean County area; (2) the court did not find that the matter was overly complex; (3) John Riordan's attorneys' services were already being performed by the executor, an attorney who had “equal, if not greater, experience” than John Riordan's counsel; (4) the amount in dispute was limited to the value of the bonds, which was $89,000; and, (5) John Riordan's counsel did not provide the court with a copy of an agreement with his client establishing an hourly rate, as required.

John Riordan appealed, challenging the amount of the counsel fees awarded by the Chancery judge. The Appellate Division affirmed.

The Appellate Division noted first that the rules in New Jersey allow for an award of counsel fees in probate actions at the discretion of the trial court, that a trial court will normally allow counsel fees to both proponent and contestant in a will dispute, and that counsel fees awarded by a trial court are disturbed on appeal “only on the rarest of occasions.” The appeals court further noted that

[A] reasonable hourly rate is to be calculated according to the prevailing market rates in the relevant community. Thus, the court should assess the experience and skill of the prevailing party's attorneys and compare their rates to the rates prevailing in the community for similar services by lawyers of reasonably comparable skill, experience, and reputation. … [A] trial court may [then] delete excessive hours from its calculation. A court [may also] reduce the … fee if the level of success achieved in the litigation is limited as compared to the relief sought.

The Appellate Division agreed that a trial judge's award of counsel fees should not be based on a judge's personal policy considerations. However, the appeals court concluded that personal policy considerations did not motivate the judge in this case as the judge identified the specific factors that led to his decision. Thus, the appeals court affirmed, finding no abuse of discretion in the trial judge's decision to limit the hourly rate and reduce the attorneys fee awarded to John Riordan's counsel.

The Riordan case is annexed here – In re Estate of Riordan, Docket No. A-5286-12T1 (App. Div. May 13, 2015)

For additional information concerning probate litigation and will contests, visit: http://vanarellilaw.com/will-contests-probate-litigation-elder-abuse-actions/#iplwc

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Assisted Living Residents Who Received Charitable “Fellowship Credits” Are Ineligible for Medicaid

A New Jersey appeals court held that a needs-based credit applied to the accounts of residents of an assisted living facility counts as income for Medicaid eligibility purposes. R.W. v. Division of Medical Assistance and Health Services (N.J. Super. Ct., App. Div., No. A-4911-13T1, Feb. 22, 2016).

This case was brought by several residents of the Francis Asbury Manor (“FAM”), a non-profit assisted living facility operated by the United Methodist Homes of New Jersey (“UMH”) and funded by the United Methodist Homes of New Jersey Foundation (the “Foundation”). The Foundation offered a “Fellowship Fund” in which it provided a “safety net” for residents who qualified financially: a “fellowship credit” would be applied to qualified residents’ monthly billing statements to reduce the total amount the residents owed. The fellowship credits ranged from $2,500 to $9,000 per month.

The Monmouth County Board of Social Services determined that these monthly fellowship credits counted as income to the residents, and accordingly terminated or denied those residents’ eligibility for the Medicaid Global Options waiver program.

The Board found that the fellowship credit was a “vendor payment” that constituted unearned income under N.J.A.C. 10:71-5.4(a)(6), which provides:

Vendor payments: Cash payments, except those payments for medical costs, which are made on behalf of the individual by an organization or other third party shall be included as unearned income.

The residents argued that the fellowship credit was not income, because the FAM did not actually receive payment from the Fellowship Fund: although the fellowship credit would appear as a credit on a resident’s monthly billing statement, it was in fact a write-off of the resident’s shortfall. The Foundation would cover part of that shortfall, and the balance came from FAM’s operating budget.

On appeal, the Administrative Law Judge found that the fellowship credit was not a personal benefit to a resident, but was an accounting device to offset the resident’s shortfall, in which the Foundation would contribute to the UMH to help offset UMH’s resulting operating loss. The ALJ thus rejected Medicaid’s claim that the fellowship credit was a “vendor payment.”

The Division of Medical Assistance and Health Services (“DMAHS”) rejected the ALJ’s decision. Although the ALJ had concluded that N.J.A.C. 10:71-5.4(a)(13)(ii) excludes from income the support and maintenance furnished to residents of a private nonprofit residential care facility, DMAHS found that this regulation was inapplicable because the FAM is an assisted living facility, not a residential care facility. The DMAHS concluded that the Board had been correct, and that the “payments by a third party to the provider of assisted living services… was income” applicable to the residents’ accounts.

On appeal to the Appellate Division, the DMAHS decision was affirmed. The appeals court rejected the residents’ argument that the fellowship credit was not income because the FAM did not actually receive payment and funds were not actually applied to the residents’ accounts. The Appellate Division agreed that the FAM was not a “residential care facility” so the exclusion set forth in N.J.A.C. 10:71-5.4(a)(13)(ii) did not apply. It determined that the residents had not provided “evidence of their monthly income or the actual distribution among FAM residents of the … fellowship credits FAM received,” so it could not determine whether the amounts identified on the billing statements were paid or allocated to other residents’ accounts. The Appellate Division concluded that,

the fellowship credit was not an accounting device or “internal notation,” as appellants posit. The … Fellowship Fund provided financial assistance to residents who could not pay part or all of the costs for their care and services… They actually received fellowship credits on their monthly billing statements, and the credits were applied to their individual accounts and reduced what they owed FAM for non-medical services. Accordingly, DMAHS correctly determined that the fellowship credits were vendor payments includable as unearned income….

For the full text of this decision, go to: R.W. v. Division of Medical Assistance and Health Services

For additional information concerning Medicaid applications and appeals, visit: http://vanarellilaw.com/medicaid-applications-medicaid-appeals/

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Assisted Living Residents Who Received Charitable “Fellowship Credits” Are Ineligible for Medicaid

A New Jersey appeals court held that a needs-based credit applied to the accounts of residents of an assisted living facility counts as income for Medicaid eligibility purposes. R.W. v. Division of Medical Assistance and Health Services (N.J. Super. Ct., App. Div., No. A-4911-13T1, Feb. 22, 2016).

This case was brought by several residents of the Francis Asbury Manor (“FAM”), a non-profit assisted living facility operated by the United Methodist Homes of New Jersey (“UMH”) and funded by the United Methodist Homes of New Jersey Foundation (the “Foundation”). The Foundation offered a “Fellowship Fund” in which it provided a “safety net” for residents who qualified financially: a “fellowship credit” would be applied to qualified residents’ monthly billing statements to reduce the total amount the residents owed. The fellowship credits ranged from $2,500 to $9,000 per month.

The Monmouth County Board of Social Services determined that these monthly fellowship credits counted as income to the residents, and accordingly terminated or denied those residents’ eligibility for the Medicaid Global Options waiver program.

The Board found that the fellowship credit was a “vendor payment” that constituted unearned income under N.J.A.C. 10:71-5.4(a)(6), which provides:

Vendor payments: Cash payments, except those payments for medical costs, which are made on behalf of the individual by an organization or other third party shall be included as unearned income.

The residents argued that the fellowship credit was not income, because the FAM did not actually receive payment from the Fellowship Fund: although the fellowship credit would appear as a credit on a resident’s monthly billing statement, it was in fact a write-off of the resident’s shortfall. The Foundation would cover part of that shortfall, and the balance came from FAM’s operating budget.

On appeal, the Administrative Law Judge found that the fellowship credit was not a personal benefit to a resident, but was an accounting device to offset the resident’s shortfall, in which the Foundation would contribute to the UMH to help offset UMH’s resulting operating loss. The ALJ thus rejected Medicaid’s claim that the fellowship credit was a “vendor payment.”

The Division of Medical Assistance and Health Services (“DMAHS”) rejected the ALJ’s decision. Although the ALJ had concluded that N.J.A.C. 10:71-5.4(a)(13)(ii) excludes from income the support and maintenance furnished to residents of a private nonprofit residential care facility, DMAHS found that this regulation was inapplicable because the FAM is an assisted living facility, not a residential care facility. The DMAHS concluded that the Board had been correct, and that the “payments by a third party to the provider of assisted living services… was income” applicable to the residents’ accounts.

On appeal to the Appellate Division, the DMAHS decision was affirmed. The appeals court rejected the residents’ argument that the fellowship credit was not income because the FAM did not actually receive payment and funds were not actually applied to the residents’ accounts. The Appellate Division agreed that the FAM was not a “residential care facility” so the exclusion set forth in N.J.A.C. 10:71-5.4(a)(13)(ii) did not apply. It determined that the residents had not provided “evidence of their monthly income or the actual distribution among FAM residents of the … fellowship credits FAM received,” so it could not determine whether the amounts identified on the billing statements were paid or allocated to other residents’ accounts. The Appellate Division concluded that,

the fellowship credit was not an accounting device or “internal notation,” as appellants posit. The … Fellowship Fund provided financial assistance to residents who could not pay part or all of the costs for their care and services… They actually received fellowship credits on their monthly billing statements, and the credits were applied to their individual accounts and reduced what they owed FAM for non-medical services. Accordingly, DMAHS correctly determined that the fellowship credits were vendor payments includable as unearned income….

For the full text of this decision, go to: R.W. v. Division of Medical Assistance and Health Services

For additional information concerning Medicaid applications and appeals, visit: http://vanarellilaw.com/medicaid-applications-medicaid-appeals/

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Chancery Division OKs Trust Decanting, Despite Beneficiary’s Opposition

In re Trusts for Stefanidis-Perez is a consolidated case involving two trusts in which the plaintiff is the beneficiary and the defendant (plaintiff’s mother) is the trustee. The plaintiff-beneficiary moved for partial summary judgment seeking to compel an accounting and seeking the removal of the defendant-trustee, and the defendant-trustee cross-moved for summary judgment for advice and direction regarding her right to withhold distributions pursuant to one of the trusts.

The plaintiff-beneficiary’s unopposed motion for an accounting was granted.

The plaintiff-beneficiary’s motion to remove her mother as trustee was based on the following alleged breaches of her fiduciary duty: self-dealing; imprudent investment; hostility toward the beneficiary; and the fact that the trustee had decanted $1.8 million from the one trust (which entitled the beneficiary to net income at age 22 and principal distributions beginning at age 30) into the second trust (in which the beneficiary had no access to income or principal, except at the discretion of the trustee, until age 65).

The court found that issues of fact prevented summary judgment on all other claimed breaches of fiduciary duty, but concluded that the trustee had not breached her fiduciary duty by decanting the funds from one trust to another.

Decanting is the distribution of trust property from one trust into another trust, “pursuant to the trustee’s authority to make distributions to, or for the benefit of, one or more beneficiaries.”   Decanting can involve a partial distribution of trust property, or the entire principal of a trust. Although the court recognized that New Jersey does not have a state decanting statute, it found that our common law permits “a trustee who has the ability to distribute principal outright from a trust to or for a beneficiary may instead exercise such authority by distributing the assets in further trust for the beneficiary,” pursuant to Wiedenmayer v. Johnson. In the Stefanidis-Perez trust from which funds were decanted, although that trust did not expressly permit decanting, the court found that the trustee permissibly decanted because the trust gave her absolute discretion to invade principal.

With respect to the cross-motion seeking instructions and advice from the court, relying upon the Restatement (Second) of Trusts and Tannen v. Tannen, the court concluded that summary judgment was appropriate and that the trustee had authority to withhold mandatory distributions under the terms of the trust.

A copy of Stefanidis-Perez can be found here –  In re Trusts for Stefanidis-Perez, Docket No. CP-248-14 (Essex County, March 22, 2016)

For additional information concerning estate planning and administration, visit: http://vanarellilaw.com/estate-planning-administration/

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Legal Malpractice Claim Based On Prospective Client’s Contact Only With Law Firm Secretary Dismissed

New Jersey Appellate Division rules prospective client’s correspondence with law office secretary who did not mention the matter to the attorney failed to establish an attorney-client relationship for purposes of a legal malpractice suit. Shapiro v. Rinaldi, Docket No. A-1753-14T4 (App. Div.,March 18, 2016)

After falling in a pot hole on a city street and injuring her shoulder, Barbara Shapiro called the office of Mark Rinaldi, Esq., a solo practitioner who had represented Shapiro’s companion the year before in a landlord-tenant matter.

When Shapiro called Rinaldi’s office, she spoke to his secretary, Nancy. Shapiro asked whether Rinaldi handled personal injury cases involving slip and falls in the street, and Nancy said, “absolutely.” Nancy asked Shapiro to email photos of the area where she fell; when Nancy received the emailed photos, she replied that she would print them and give them to Rinaldi, and that Rinaldi would “give [Shapiro] a call to discuss it.”

Shapiro heard nothing further from Rinaldi’s office, and claimed that she thought the firm was investigating the circumstances. After taking no further action for three months, Shapiro contacted another attorney, who advised her, for the first time, of the time limit for filing a notice of claim with the city. The time limit had expired, and a motion for permission to file a late notice of claim (filed on behalf of Shapiro by a new attorney) was denied. Shapiro then sued Rinaldi for legal malpractice.

Nancy was deposed. She testified that, after the email exchange with Shapiro, she had neglected to print the photos or advise Rinaldi of Shapiro’s claim. She testified that office procedure was for her to print such photos, type up the information, and give it to Rinaldi; however, Nancy had been working on something else at the time, and did not follow the office procedure.

Rinaldi testified that he never knew about Shapiro’s accident until he received notice of the legal malpractice action. He testified regarding the office procedure he had established for new personal injury cases, in which Nancy would take notes and provide him with a memo.

Following completion of discovery, Rinaldi filed a motion for summary judgment, which was granted. Shapiro appealed.

The Appellate Division noted that an attorney-client relationship arises when:

[A] person manifests to a lawyer the person’s intent that the lawyer provide legal services for the person; and either

• the lawyer manifests to the person consent to do so; or


• the lawyer fails to manifest lack of consent to do so, and the lawyer knows or reasonably should know that the person reasonably relies on the lawyer to provide the services.

The lawyer-client relationship is typically established by an express agreement, but can also be inferred from the conduct of the parties, if there is (a) reliance by the client, coupled with (b) the attorney’s awareness and “tacit acceptance” of it. The appellate court concluded that both of these two elements were lacking. First, any reliance by Shapiro was not reasonable: Nancy had never stated that Rinaldi would take the case, and when plaintiff never heard back from the firm, she should have realized that Rinaldi was not pursuing her claim. Second, there was no awareness by Rinaldi, because Nancy had neglected to inform him of the case.

The Appellate Division also discussed RPC 5.3(b) of the Rules of Professional Conduct, which imposes a duty on lawyers with respect to their “non-lawyer assistants.” Shapiro claimed that Rinaldi was obligated to make reasonable efforts to ensure that Nancy’s conduct met the standards of the Rules of Professional Conduct, and that Nancy should have been trained to alert prospective clients of rights such as the impending expiration of a statute of limitations.

The Appellate Division rejected Shapiro’s contention because,

[Shapiro’s contention] ignores the fact that a lawyer may not employ a non-lawyer assistant to advise clients with respect to their legal rights…. Informing a potential client of deadlines to file a claim would clearly constitute “advising clients with respect to their legal rights.”

Instead, the Appellate Division agreed with the trial court’s finding that Rinaldi had made reasonable efforts to establish procedures to ensure that Nancy complied with Rinaldi’s professional obligations.

The Appellate Division concluded that there was no express or implied attorney-client relationship, so there was no basis for holding Rinaldi liable for malpractice. It also found that Shapiro and Rinaldi’s prior dealings in the unrelated landlord-tenant matter did not commit Rinaldi to represent Shapiro in the personal injury matter.

A copy of Shapiro v. Rinaldi can be found here – Shapiro v. Rinaldi

For additional information concerning New Jersey elder law, visit: http://vanarellilaw.com/legal-services/

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Court Orders Plaintiff to Pay All Fees in Withdrawn Contested Guardianship Case

A trial court ruled that the plaintiff, who brought but ultimately withdrew the complaint in a contested guardianship case, must pay the legal fees of both the alleged incapacitated person and the court-appointed evaluator.  Matter of Madeline H., 31441-I-2015

This contested New York guardianship case was settled after extensive conferences pursuant to a stipulation of settlement which provided that the complaint was withdrawn without prejudice. In addition, the stipulation of settlement set aside up to $50,000 for payment of legal fees, and provided that the court was to apportion legal fees of the court evaluator and the counsel for the alleged incapacitated person (AIP) between the petitioner and the AIP.

The trial judge noted that, when a guardianship complaint is denied or dismissed, the governing New York statute permits the judge, in his or her discretion, to award reasonable fees to the court evaluator, payable by the petitioner, the AIP or both. Likewise, the law permits judges to order a petitioner to pay reasonable compensation to counsel for the AIP when a petition is dismissed.

Although the court recognized that the law failed to address the Court’s power to award fees when a petition is withdrawn, the judge said a withdrawn petition served as the “functional equivalent” of a dismissed guardianship complaint, giving the court the same authority to award fees provided when a complaint is denied or dismissed.

Having identified its statutory authority to rule in the case, the Court then concluded that the plaintiff, who was the AIP’s son, was entirely responsible for the legal fees.  The Court wrote that the “petitioner’s motives were at the very least questionable in commencing this ultimately meritless guardianship proceeding.” The Court also noted that the guardianship matter was just the latest battle in fights including a divorce case between the mother and father, as well as a “complicated trust dispute in Surrogate’s Court.” The judge said that his conclusion that “the petitioner, who is in a far superior financial position compared to the [AIP], did not bring this proceeding for altruistic purposes is inescapable.”

The Court also declared that the court evaluator’s report “unequivocally and emphatically concluded” the AIP was not incapacitated, and noted that the efforts made by the counsel for the AIP led to a positive result for his client, “with her civil liberties fully intact, there being no need for a guardian for her.”

As a result, the Court ordered the petitioner to pay approximately $27,000 to counsel for the AIP and nearly $23,000 to the court evaluator. The AIP had to pay nothing.

The case is annexed here – Matter of Madeline H

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Donald D. Vanarelli, Esq. Named to the New Jersey Super Lawyers List In 2016, For The 10th Consecutive Year

The Law Office of Donald D. Vanarelli is proud to announce that Donald D. Vanarelli, Esq. has been named to the 2016 Super Lawyers list in Elder Law. This is the 10^th consecutive year in which Mr. Vanarelli has been named to the Super Lawyers list in New Jersey.

Elder Law, which includes Special Needs Planning, is a legal specialty focusing on the legal needs of seniors and people with disabilities. The major legal practice areas within Elder Law and Special Needs Planning include estate planning and trust administration; Social Security, SSI, Medicare, Medicaid and other public benefits; probate litigation and will contests; disability planning, including guardianships and special needs trusts; and the protection of elders and the disabled against abuse, neglect, and  exploitation.

The Super Lawyers website notes that “Super Lawyers is a rating service of outstanding lawyers from more than 70 practice areas who have attained a high-degree of peer recognition and professional achievement. The selection process includes independent research, peer nominations and peer evaluations.” Each candidate for the Super Lawyer title is evaluated on 12 indicators of peer recognition and professional achievement to ensure that only the best in the business are selected for this recognition. Selections are made on an annual, state-by-state basis. There are more than 85,000 attorneys practicing in New Jersey in 55 specialty categories, but only 5% are named to the Super Lawyers list each year.

In 2007, the New Jersey Supreme Court appointed a Special Master to conduct an investigation into the validity of the selection methodology used by “Super Lawyers” and other attorney ranking services. After a year-long investigation, the Special Master issued a 300+ page report, concluding that the “Super Lawyers” methodology for selecting outstanding attorneys was valid. As a result, in 2008 our Supreme Court, for the first time, permitted attorneys to publicly identify themselves as having been selected for inclusion in the list of “New Jersey Super Lawyers.” In re Opinion 39 of the Committee on Attorney Advertising, 197 N.J. 66 (2008)

The Law Office of Donald D. Vanarelli congratulates Mr. Vanarelli on being named to the Super Lawyers List in New Jersey in 2016, for the 10^th consecutive year.

To learn more about the Law Office of Donald D. Vanarelli, visit:http://vanarellilaw.com/about-the-firm/

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To Be Legally Enforceable, An Alleged Gift Must Be Delivered To The Recipient

New Jersey appeals court ruled a surviving spouse failed to prove that her deceased spouse made an enforceable gift based on the deceased spouse’s failure to deliver the gift during his life to the survivor. Matter of the Estate of Herenchak, 2015 N.J. Super. Unpub. 2014 WL 9868901 (N.J. Super. Ct. App. Div. June 8, 2015)

Alexander Herenchak was a widower who was married for 41 years before he married Lyudmyla in 2005. Alexander died 5 years later, in 2010, at the age of 84.

Before their marriage, the parties entered into a pre-nuptial agreement in which each agreed to maintain sole ownership of all their respective property. They also waived their right to an elective share of the deceased spouse’s estate. However, the agreement did allow the Herenchaks to transfer property to each other during the marriage.

Prior to marrying plaintiff, Alexander entered into an “Agreement to Sell Development Easement” with the State of New Jersey, in which he agreed to sell a development easement on a 142–acre plot of farmland he owned to New Jersey for $20,000 per acre. The final total price for the purchase of the development rights was in excess of $2.7 million.

Lyudmyla was never a party to the agreement to sell the development easement on the farmland. However, the title insurance company required that Lyudmyla sign the deed for conveyance of the development rights and the affidavit of title because the marital residence was located on the farmland, although the area where the home was located was not included in the easement. Under New Jersey law, Lyudmyla had a right of joint possession to the marital home as long as both spouses were alive.

After Alexander died, his Last Will and Testament was probated. Under the terms of Alexander’s Will, Lyudmyla was given a life estate in the marital residence and $250,000 in a trust. Alexander’s two children from his first marriage inherited the remainder of his Estate. Lyudmyla did not challenge the Will.

Soon thereafter, Lyudmyla filed an order to show cause and verified complaint against Alexander’s estate, seeking to obtain one-half of the proceeds from the post-marital sale of development rights to the 142–acre farm Alexander owned. Lyudmyla’s claim to the sales proceeds stemmed from an alleged gift made by Alexander to her of one-half of the sales proceeds. The gift was allegedly evidenced by her participation in the signing of the documents required by the title insurance company. In response, Alexander’s estate filed a motion for summary judgment, and Alexander’s two children filed a motion to dismiss for failure to state a claim.

At the motion hearing, the trial court found that Lyudmyla was required to prove the elements of an enforceable, inter vivos gift via evidence that was “clear, cogent, and persuasive.” The elements needed to prove a gift from a decedent are: (1) an unequivocal donative intent on the part of the donor; (2) an actual or symbolical delivery of the subject matter of the gift; and (3) an absolute and irrevocable relinquishment by the donor of ownership and dominion over the subject matter of the gift. The trial court found that Lyudmyla failed to prove the elements of a gift, and therefore granted summary judgment in favor of Alexander’s estate. Lyudmyla appealed.

The appeals court affirmed, ruling that Lyudmyla failed to establish that the sale proceeds were a gift. Lyudmyla conceded that approximately $2.7 million from the sale was deposited exclusively into the Alexander’s bank account, which was in his name alone. Thus, there was no delivery of the alleged gift of one-half the proceeds from the sale to Lyudmyla.

The case is annexed here – Matter of the Estate of Herenchak

For additional information concerning probate litigation and will contests, visit: http://vanarellilaw.com/will-contests-probate-litigation-elder-abuse-actions/#iplwc

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NJ Attorney Suspended for Arranging Improper Loan from Elderly Widow

In order to protect the public and and guard against elder abuse by lawyers, the New Jersey Supreme Court suspended an attorney from the practice of law for one-year after the attorney borrowed nearly $90,000 from an elderly, unsophisticated widow who he knew for many years. In the Matter of William J. Torre, an Attorney at Law, 223 N.J. 538 (2015)

William J. Torre was admitted to practice law in New Jersey in 1984. M.D. had been a friend of Torre’s family for many years and was a customer at his parents’ laundromat. Torre became M.D.’s attorney in the early 1990s when he prepared wills for her and her husband. Torre provided other legal services to M.D. Over time, M.D. also relied on Torre and his office staff for additional help. The staff paid her monthly bills and ran occasional errands for her.

In 2008, M.D. was a 86 years old widow who lived alone and was legally blind. Although mentally alert, she was unsophisticated about financial matters. In that year, M.D. signed a power of attorney in favor of Torre. M.D. also executed a new will that Torre prepared, which named him the executor of her estate.

Only days after M.D. signed the power of attorney, Torre told M.D. about his personal financial difficulties due to mounting tuition bills and mortgage payments. Torre said he needed about $100,000, and M.D. agreed to lend him money. Torre prepared a note that M.D. signed the next day. The note provided for M.D. to lend respondent $89,250 — about 70% of her total assets. The note was unsecured.

Torre failed to make the payments due under the note. M.D. ultimately retained another attorney to try to collect the overdue balance. The attorney filed a court complaint, and a default judgment was entered against Torre in the amount of $90,720. Thereafter, M.D. also filed an ethics complaint against Torre. One month later, M.D. passed away, before the investigation of the ethics complaint was completed.

After a hearing, the ethics panel recommended that Torre be censured. The panel’s recommendation was affirmed by the Disciplinary Review Board (DRB).

The DRB’s decision was reviewed by the New Jersey Supreme Court. Before the Supreme Court, Torre acknowledged that he violated applicable ethics rules, and he asked the Court to adopt the recommendation of the ethics panel and the DRB and censure him.

The Supreme Court first established the standard to be used when judging Torre’s actions. The Court held that lawyers are required to maintain “the highest professional and ethical standards” in their dealings with clients. The Court then found that Torre failed to meet the standard. The Court found that the terms of the unsecured note were neither fair nor reasonable; importantly, Torre did not advise M.D. in writing to seek advice from an independent attorney; and M.D. did not give informed consent in writing. The Court stated that it is “hard to imagine that any lawyer would have advised M.D. to place her life savings at risk and lend her lawyer a substantial amount of money with no security or collateral to protect her.”

The Court found that Torre caused substantial harm on two levels: the financial hardship on M.D., and emotional turmoil suffered by M.D. M.D. lost nearly 70% of her life savings through an unsecured loan. She was forced to file a lawsuit to recoup her funds rather that being able to enjoy her twilight years in peace. Also, M.D. was very distressed when she realized that she had wrongly placed her trust in a long-time legal counselor.

The Court was especially concerned about Torre’s actions based upon the presence of elder abuse:

We consider [Torre’s] conduct against the backdrop of the serious and growing problem of elder abuse. The State’s population is steadily aging. From 2000 to 2010, the number of people in our State age sixty-five and older grew by 6.5 percent — faster than the total population. … As of 2012, seniors accounted for 14.1 percent of the State’s total population, or 1.25 million.

In the end, the Court found that Torre had victimized a vulnerable, elderly client and suspended him from the practice of law for one year. The Court also put all New Jersey attorneys on notice that any incidence of elder abuse by lawyers would be dealt with harshly when it stated:

The discipline imposed today is meant to provide notice to attorneys that serious consequences will result from this form of misconduct.

The case is annexed here – In the Matter of William J. Torre, an Attorney at Law, 223 N.J. 538 (2015)

The Law Office of Donald D. Vanarelli website: http://vanarellilaw.com/

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NJ Law Revision Commission Considers Statutory Revision to Codify Supreme Court Decision in Saccone Case

The New Jersey Law Revision Commission (“NJLRC”) is an independent legislative commission of the State that engages in an ongoing review of statutes and case law, in order to remedy defects and clarify confusing language in those statutes.

The NJLRC is proposing a revision to the New Jersey statutes in order to codify the Supreme Court’s decision in Saccone v. Police and Firemen’s Retirement System, 219 N.J. 369 (2014), a case that I successfully litigated. You can read my blogpost regarding the Saccone case here. 

I was pleased to be invited by the NJLRC to provide my comments regarding the proposed legislation. A copy of the letter containing my comments can be found here –

Download (PDF, 316KB)

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SSA Must Now Provide Reasons for Claim Denials With Citations To Regulations When A Trust Causes SSI Ineligibility

The Social Security Administration (SSA) recently published new guidelines mandating that the agency issue detailed notices when individuals are determined to be ineligible for Supplemental Security Income (SSI) benefits because of excess resources that include a countable trust. The public was notified of the new guidelines via internal agency instructions published in an Emergency Message. The new notices must identify the basis for a denial of SSI benefits when a trust is determined to render an applicant or recipient ineligible.

The Emergency Message indicates that SSA found the agency’s current notices sometimes provide incomplete information about the reasons for denials of benefits due to excess resources when a trust is involved. Under the new guidelines, the agency must issue a manual notice whenever an individual:

• is ineligible due to excess resources and those resources include a trust;


• has excess resources, but is eligible for SSI based on an undue hardship waiver; or,


• has a change in eligibility or payment status due to trust or undue hardship involvement.

When SSI benefits are denied or an individual’s payment status is effected in one of the above situations, the new guidelines require that SSA issue a notice containing the following information:

1. Identifying the applicable section of the trust containing the problematic language or issue;


2. Citation to the agency’s Program Operations Manual System (POMS), the agency’s operating manual, containing the policy requirements on that subject; and,


3. The following language indicating where the POMS can be found on-line – “You can find the Program Operations Manual System (POMS) on the Social Security website at https://secure.ssa.gov/poms.nsf/Home?readform.”

The instructions are available online at https://secure.ssa.gov/apps10/reference.nsf/links/03022016015517PM.

Hopefully, this new policy instruction will help trust beneficiaries, trustees and their counsel to remedy issues with trusts more quickly and efficiently.

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Top 10 Facts About Capital Gains and Losses

When you sell a capital asset, the sale normally results in a capital gain or loss. A capital asset includes most property you own for personal use or own as an investment. Here are 10 facts that you should know about capital gains and losses:

1. Capital Assets. Capital assets include property such as your home or car, as well as investment property, such as stocks and bonds.


2. Gains and Losses. A capital gain or loss is the difference between your basis and the amount you get when you sell an asset. Your basis is usually what you paid for the asset.


3. Net Investment Income Tax. You must include all capital gains in your income and you may be subject to the Net Investment Income Tax if your income is above certain amounts. The rate of this tax is 3.8 percent. For details, visit IRS.gov.


4. Deductible Losses. You can deduct capital losses on the sale of investment property. You cannot deduct losses on the sale of property that you hold for personal use.


5. Limit on Losses.  If your capital losses are more than your capital gains, you can deduct the difference as a loss on your tax return. This loss is limited to $3,000 per year, or $1,500 if you are married and file a separate return.


6. Carryover Losses. If your total net capital loss is more than the limit you can deduct, you can carry it over to next year’s tax return.


7. Long and Short Term.  Capital gains and losses are treated as either long-term or short-term, depending on how long you held the property. If you held it for one year or less, the gain or loss is short-term.


8. Net Capital Gain.  If your long-term gains are more than your long-term losses, the difference between the two is a net long-term capital gain. If your net long-term capital gain is more than your net short-term capital loss, you have a net capital gain.


9. Tax Rate.  The tax rate on a net capital gain usually depends on your income. The maximum tax rate on a net capital gain is 20 percent. However, for most taxpayers a zero or 15 percent rate will apply. A 25 or 28 percent tax rate can also apply to certain types of net capital gain.


10. Forms to File. You often will need to file Form 8949, Sales and Other Dispositions of Capital Assets, with your federal tax return to report your gains and losses. You also need to file Schedule D, Capital Gains and Losses, with your tax return.

For more information about this topic, see the Schedule D instructions and Publication 550, Investment Income and Expenses.

Additional IRS Resources:

• Form 8960, Net Investment Income Tax— Individuals, Estates, and Trusts


• Capital Gains and Losses

(From the IRS Tax Tips e-Newsletter Issue Number 2016-33)

For additional information concerning estate planning and administration, visit: http://vanarellilaw.com/estate-planning-administration/

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