Trust Instrument Does Not Immunize Trustee From Liability For Breaching Duty Of Undivided Loyalty To Beneficiaries

In 1992, Ann Mark created two irrevocable trusts for the benefit of her three children. In 1997, Jared Scharf became the successor trustee for the trusts, and used some of those assets to form a separate trust for each of Ms. Mark's three children. Each of the trusts stated that they were governed by New York law.

In 2010, the trustee invested funds from those trusts into a hedge fund in which his son was a principal. In 2011, after the hedge fund generated a return, the trustee advised Ms. Mark and her children that he intended to increase the investment in the hedge fund, and advised them in writing that his son was a principal. Thereafter, the hedge fund suffered substantial losses. In 2013, Ms. Mark and her children demanded that the trustee withdraw the investments from the hedge fund. The trustee refused, and Ms. Mark and her children filed a lawsuit seeking his removal as trustee, and seeking reimbursement for the losses that resulted from his investments.

Although the overall value of the trusts increased significantly, the investments in the hedge fund resulted in losses.

Both sides filed cross-motions for summary judgment. The trial court granted the trustee's summary judgment motion, finding that the trust instruments permitted the trustee to make the investment in issue because it authorized him “to hold and retain all property received from any source without regard to … the trustee's personal interest in such property….”

On appeal, the Superior Court, Appellate Division disagreed. Applying New York law, it reversed the order granting summary judgment in favor of the trustee, and granted partial summary judgment to Ms. Mark and her children. The Appellate Division found that the trustee's investment in the hedge fund constituted a conflict of interest. It explained that the motion judge had mistakenly interpreted the trust language: although the trust insulated the trustee from inaction regarding trust property, it did not do so with respect to investments of trust property. Thus, although the trust protected the trustee when he took no action with respect to trust property, it did not protect the trustee from liability for making investments that breached his duty of undivided loyalty to the beneficiaries: “[the trustee] violated his fiduciary duty to the beneficiaries because this investment created a conflict of interest that resulted in a financial loss to the trusts.”

Although the trustee argued that the hedge fund investment represented only a negligible portion of the trust assets, the appellate court noted that this argument related to damages, not to liability. The appellate court reversed the motion judge's decision, and granted partial summary judgment as to liability against the trustee.

A copy of In the Matter of the May 1, 1992 Mark Family Trust  can be found here – In the Matter of the May 1, 1992 Mark Family Trust

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

The post Trust Instrument Does Not Immunize Trustee From Liability For Breaching Duty Of Undivided Loyalty To Beneficiaries appeared first on Elder Law Attorney NJ | The Law Office of Donald D. Vanarelli.

In Contested Guardianship Action, Counsel Fees Awarded to Plaintiff and Court-Appointed Guardian; Denied to Lawyer Hired by Alleged Incapacitated Person

Plaintiff filed an action seeking to declare his mother, D.W., an incapacitated person, and seeking to be appointed as her guardian. D.W. contested the guardianship action, claiming that she was not incapacitated and did not need a guardian.

The court had appointed Matthew Van Natten, Esq. as D.W.'s counsel. Later, D.W. privately retained Alan John Clark, Esq. as her attorney, and the court appointed Van Natten to be D.W.'s guardian ad litem. Approximately a year later, Clark withdrew as counsel, and a new attorney was substituted as counsel for D.W.

The guardianship action was litigated more than nineteen months, during which discovery was conducted, motions were filed and mediation was attempted. On the day the case was scheduled for trial, the parties settled the case. The consent order appointed a “financial monitor” to oversee D.W.'s finances, but D.W. retained her decision-making authority over her finances. The consent order provided that the trial court would determine all counsel fee applications.

Counsel fee applications were filed by plaintiff, the guardian ad litem, and Clark.  D.W. opposed all of the applications.

The trial court awarded counsel fees to be paid from D.W.'s estate to the plaintiff and to the guardian ad litem, but denied Clark's fee application. The court reasoned that fees to the plaintiff and guardian ad litem were warranted under the court rules, even though there was no determination of incapacity. As to Clark, the court held that the court rules did not provide for a fee award to be made to an attorney who is directly retained by an alleged incapacitated person. Instead, the court reasoned that Clark's recourse was to seek payment of his fees directly from D.W.

On appeal, the Superior Court, Appellate Division affirmed the fee order, finding that the trial court had the authority to make a counsel fee determination, and that the consent order had expressly stated that the trial court would make a determination as to counsel fees.

A copy of In the Matter of D.W. can be found here – In the Matter of D.W., An Alleged Incapacitated Person

For additional information concerning guardianships and fiduciary services, visit: http://vanarellilaw.com/guardianship-fiduciary-services/

The post In Contested Guardianship Action, Counsel Fees Awarded to Plaintiff and Court-Appointed Guardian; Denied to Lawyer Hired by Alleged Incapacitated Person appeared first on Elder Law Attorney NJ | The Law Office of Donald D. Vanarelli.

Appellate Court Affirms DDD Denial of Payment to Guardian

M.L. is the co-guardian and mother of C.L., a disabled 25-year old man with autism and epilepsy. C.L. lives with his parents in their home. He receives support and funding from the New Jersey Department of Human Services, Division of Developmental Disabilities (“DDD”) under their Self-Directed Services (“SDS”) program. Under the SDS program, he receives an annual budget for self-directed day services. The program includes a support coordinator and a fiscal intermediary agency that contracts with DDD for services and acts as the employer of record for providing those services.

M.L. manages the self-directed daytime services her son receives from the DDD; a substantial portion of those services are used to pay Direct Support Professionals (“DSPs”), the people who supervise and assist her son several hours per day.

In 2013, M.L. suspected that the DSP who was assisting her son had accessed her credit card. When the DSP refused to submit to a background check, she terminated his services.

M.L. told the DDD support coordinator that it would take time to find a suitable replacement DSP, and she asked permission to serve as a paid emergency DSP in the meantime. DDD denied her request.

DDD advised M.L. that its policy prohibits the payment for services that are furnished by a “parent/stepparent, spouse, guardian, or relative residing in the service recipient's residence.” Although the policy has an exception that allows for payment to a relative living in the residence to act as an emergency DSP, that exception does not apply to “legally responsible relatives.” Because M.L. is C.L.'s mother and guardian, DDD policy prohibited payment to her from the SDS budget.

M.L. filed a petition with the DDD. Following an informal conference, the DDD upheld its decision. She requested administrative review; a Final Agency Decision upheld the finding that DDD's policy expressly prohibits the use of the SDS budget to pay M.L.

M.L. appealed to the New Jersey Superior Court, Appellate Division, and the Appellate Division affirmed the denial of her request.

The appellate court recited M.L.'s arguments, which challenged the wisdom of a policy barring payment to a guardian. She argued that the policy creates a hardship for the family, that it is impractical because of delays in finding qualified DSPs, and that it is illogical to bar payment to a guardian who actually provides services, when payment would otherwise be made to a DSP for providing those services. The Appellate Division acknowledged these policy arguments, but concluded that “we are convinced she has failed to establish that the [DDD's] decision prohibiting the payment of funds from C.L.'s SDS budget to M.L. is arbitrary, capricious, or unreasonable.” It continued that,

The policy prohibiting M.L. from receiving payment … promotes appropriate oversight of the services provided and the payments rendered for the services [and] is founded upon the [DDD's] judgment that the fiduciary who is provided the funding on behalf of the person with developmental disabilities … should not also be the individual to whom the funds are paid.

The court concluded that such an arrangement “could adversely affect the fiduciary's ability to independently-and without any conflict of pecuniary interest-determine the timing and extent of the services provided….” It held that the DDD's decision was properly designed “to advance the [DDD's] legitimate interest in providing funding only to fiduciaries who have no personal financial interest in the funds due under the SDS program.”

A copy of In the Matter of C.L. can be found here – In the Matter of C.L.

For additional information concerning NJ elder law and special needs planning visit: http://vanarellilaw.com/legal-services/

The post Appellate Court Affirms DDD Denial of Payment to Guardian appeared first on Elder Law Attorney NJ | The Law Office of Donald D. Vanarelli.

NJ Supreme Court Declines to Discipline Lawyer Unable to Completely Remove Offending Blog Post From the Internet

Jay Jason Chatarpau, Esq., a New Jersey employment discrimination attorney, represented Rameena Khan in a lawsuit claiming that her employer, Rite Aid stores, among others, discriminated against her on the basis of age, race, sex, ethnicity or national origin, in violation of the New Jersey Law Against Discrimination.

Hon. Christine A. Farrington, J.S.C., presided over a jury trial. The jury returned a verdict in favor of defendants. Chatarpau appealed. While the appeal was pending, the case settled. Chatarpau signed a settlement agreement, which included the following provision:

Plaintiff's Attorney agrees that as of the execution of this Agreement, [he] has removed: (a) any and all articles, blogs, or other writings that have been authored, posted, publicized or controlled by [him], which disparage or discuss the Lawsuit, Complaint, Federal Action, Amended Complaint, the Trial or the Appeal in any manner whatsoever, from the Internet and elsewhere, … ; and (b) all hyperlinks and references to said articles from the Internet. In addition, respondent agrees not to write any further articles or blogs, or make any non- privileged statements, regarding or referencing the Lawsuit, the Complaint, the Amended Complaint, the Federal Action, the Trial or the Appeal.

The “articles” referred to in the above provision included one that appeared on the website of Chatarpau's law firm, http://chatarpaullaw.com (the law firm's website). The article summarized the facts underlying Rite Aid's termination of Khan's employment, and purported errors made by Judge Farrington at trial. Chatarpaul stated that:

Judge Farrington made various prejudicial comments suggesting lack of impartiality, improperly excluding [sic] evidence and testimonies, etc., which are the subject of a pending appeal. … [T]he jury's verdict in favor of Rite Aid was the product of many errors of the trial judge, including various comments suggesting favoritism towards the position of Rite Aid.

The Office of Attorney Ethics (OAE) asked Chatarpaul to remove the article about Judge Farrington from his firm's website, and Chatarpaul complied with the OAE's request. However, the article remained accessible on the internet through search engines, such as Google. Chatarpaul then took steps to completely remove the article from the internet, and he also sent a letter of apology to Judge Farrington. Unfortunately, the article remained accessible through a Google search, and Chatarpaul admitted that he didn't know how to thoroughly “scrub” the article from the internet.

The OAE found, among other rulings, that “[Chatarpaul] failed to take reasonable and necessary steps to make sure the [a]rticle was completely removed from the Internet …, and that his failure to do so has unnecessarily consumed resources of the State.”

The New Jersey Supreme Court rejected the OAE's ruling, declining to impose any discipline on Chatarpaul for failing to completely remove the article that criticized Judge Farrington.  The Court found that a violation of the ethics rules requires intent, and that Chatarpaul did not intend to leave the article about Fudge Farrington on the internet. To the contrary, he intended to remove it, and, in fact, removed it from his website, but could not remove the article from the entire internet. Those actions did not give rise to an ethics violation, according to the Court. However, the Court required Chatarpaul to reimburse the OAE for administrative costs and expenses incurred in the prosecution of the matter.

The Court's opinion can be found here-http://drblookupportal.judiciary.state.nj.us/SearchResults.aspx?type=docket_no&docket_no=15-134

For additional information concerning NJ elder law and special needs planning visit: http://vanarellilaw.com/legal-services/

The post NJ Supreme Court Declines to Discipline Lawyer Unable to Completely Remove Offending Blog Post From the Internet appeared first on Elder Law Attorney NJ | The Law Office of Donald D. Vanarelli.

Appellate Court Affirms Admission of Will to Probate, Rejecting Lack of Capacity and Undue Influence Claims

When Helen Weste died in 2010, she was divorced with no children.

In 1994, she had executed a will leaving her estate to charities and nieces and nephews.

In 2001, Helen's health began to fail. In April 2002, family members contacted her ex-husband (who was agent under her power of attorney), and he flew in from Florida to see her and had her admitted to a hospital. At the time, a psychiatric evaluation was performed, which concluded that Helen's insight and judgment were poor and that she was unable to care for herself as a result of dementia. In June 2002, she was transferred from the hospital to an assisted living facility, where she remained until her death. In July, after her ex-husband died, her niece Joanne Halkovich was appointed her guardian.

In February 2002, Helen had contacted an attorney, Victor Padlo, Esq., to schedule an appointment. Her friend John Brek (“Brek”) drove her to the appointment, although he had no association with the attorney and no prior knowledge of the reason for the meeting. During the meeting, Helen gave Mr. Padlo a hand-written document that he later testified was essentially a holographic will. Padlo interviewed Helen alone and had no doubt about her testamentary capacity, although in other cases he had declined to prepare estate documents for others based upon his assessment of their capacity. Padlo prepared a will for Helen, and in March 2002 she returned to his office and executed the will. It left specific bequests to charity and to her niece Louise Ogletree, and 90% of her residuary estate to Brek. Brek was named executor.

Following Helen's death, niece Joanne Halkovich (“Joanne”) was originally appointed administratrix CTA of the 1994 will. However, in October 2011, Brek filed a complaint seeking to probate the 2002 will which named him as executor.

Joanne opposed Brek's complaint, claiming lack of testamentary capacity and undue influence. Expert witnesses provided conflicting testimony as to Helen's capacity in 2002.

Following a chancery court hearing, Hon. Frank M. Ciuffani issued a written opinion, concluding that the evidence did not clearly and convincingly establish lack of testamentary capacity. He also rejected Joanne's claim of undue influence, finding no evidence to support the claim. Judge Ciuffani admitted the 2002 will to probate and appointed Brek as executor.

On appeal, the Appellate Division affirmed Judge Ciuffani's decision. It noted that appellate review of the findings of a judge in a non-jury trial is limited and that,

[i]n particular, the findings of the trial judge on the issues of testamentary capacity and undue influence, though not controlling, are entitled to great weight since the trial court had the opportunity of seeing and hearing the witnesses and forming an opinion as to the credibility of their testimony.

The appellate court noted the general presumption that a testator is of sound mind and competent when he or she executed a will, and that every person has the right to dispose of his/her estate as he or she sees fit. It found no basis to conclude that Judge Ciuffani's factual findings and credibility assessments were contrary to the interests of justice.

A copy of In the Matter of the Estate of Weste can be found here – Matter of the Estate of Weste

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

The post Appellate Court Affirms Admission of Will to Probate, Rejecting Lack of Capacity and Undue Influence Claims appeared first on Elder Law Attorney NJ | The Law Office of Donald D. Vanarelli.

Medicaid Officials Not Liable For Providing False Information; Applicant Could Have Obtained Correct Info By Hiring A Lawyer

In a recent opinion, an appellate court in Minnesota held that county officials were not liable for incorrectly telling a Medicaid applicant that his estate would not be subject to a Medicaid lien because the applicant could have hired a lawyer to learn the correct information. Benigni v. St. Louis County (Minn. Ct. App., No. A15-1154, June 13, 2016).

In 2004, Kenneth Benigni applied for Medicaid benefits from the Lake Superior Community Health Center in Duluth, Minnesota. The caseworker assisting him removed a six-page section of the Medicaid application form without showing it to the applicant. This section of the form included information about the state's right to place a lien on Mr. Benigni's property to recoup all monies paid by Medicaid for medical assistance provided to Mr. Benigni.

Mr. Benigni received Medicaid renewal forms in 2005 and 2007 that included information about the lien. He asked county officials about the lien and they told him, incorrectly, he would not be subject to any lien. In 2007, after requesting additional information, Mr. Benigni discovered that the Medicaid benefits were subject to recovery through liens and estate claims on his property. As a result, Mr. Benigni cancelled his Medicaid benefits. Five years later, Mr. Benigni learned that his estate was subject to a $20,000 lien as a result of the Medicaid benefits he received.

Mr. Benigni sued the county, arguing that the county officials supplied false information to him about whether a Medicaid lien could be placed on his property. The trial court granted summary judgment to the county, and Mr. Benigni appealed.

The Minnesota Court of Appeals affirmed the trial court's order dismissing Mr. Benigni's complaint.  The appeals court held that, unless they are learned in the field or have a fiduciary relationship with the person to whom they provide information, county officials are not liable for supplying incorrect information to the public if the information is readily available to the public from other sources. In this case, the appeals court ruled that the county officials were not learned in the field, they did not have a fiduciary relationship with Mr. Benigni, and Benigni could have learned the correct information about Medicaid liens by seeking legal advice from an attorney.

The case is annexed here – Benigni v. St. Louis County

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

For additional information concerning Medicaid and public benefits planning, visit: http://vanarellilaw.com/medicaid-public-benefits-planning/

The post Medicaid Officials Not Liable For Providing False Information; Applicant Could Have Obtained Correct Info By Hiring A Lawyer appeared first on Elder Law Attorney NJ | The Law Office of Donald D. Vanarelli.

Trial Court Did Not Abuse its Discretion in Restricting Son's Visitation with Incapacitated, Gravely Ill Mother

In 2014, Joseph Fabics filed a verified complaint seeking guardianship of his mother. The court appointed Ann Renaud, Esq. to represent Mrs. Fabics in connection with the action.

The court-appointed attorney submitted a report to the court concluding that Joseph would be an unsuitable guardian, and recommending that Mrs. Fabics's other son, Laszlo, be appointed as guardian. She noted Joseph's behavior during the course of the litigation, which “to the educated lay person demonstrated mental illness.” The court-appointed attorney noted that Joseph made similar claims regarding his mother's incapacity in 2006, and that Adult Protective Services (APS) had investigated and concluded that “the problem did not reside with [Mrs. Fabics], but rather with [Joseph].” APS concluded that Joseph was harassing and causing anxiety to Mrs. Fabics. In 2007, Mrs. Fabics executed a power of attorney naming her son Laszlo as her agent, and expressed a preference that Laszlo be appointed as her guardian. Following a hearing, the court appointed Laszlo as guardian, but ordered Laszlo to permit Joseph to visit their mother under various conditions.

Several weeks later, Joseph filed an emergent application claiming that the guardian, Laszlo, was preventing visitation. A hearing followed, at which time Lazlo testified that their mother was on hospice care and was only conscious approximately a half hour per day. The court-appointed attorney reported that Joseph had visited his mother on a number of occasions, and that he caused disturbances that were distressing to Mrs. Fabics. Following the hearing, the court ordered that Joseph be permitted to visit his mother one hour per day.

Mrs. Fabics died several days later. Thereafter, Joseph filed an appeal claiming that the court abused its discretion in limiting his right to visit with his gravely ill mother.

Although the Appellate Division found the visitation claim to be moot based on Mrs. Fabics's death, it reviewed the record and concluded that there was no abuse of judicial discretion in the visitation restriction that the trial court had concluded to be in Mrs. Fabics's best interest.

A copy of In the Matter of Anna Fabics can be found here – In the Matter of Anna Fabics

For additional information concerning guardianships and fiduciary services, visit:  http://vanarellilaw.com/guardianship-fiduciary-services/

The post Trial Court Did Not Abuse its Discretion in Restricting Son's Visitation with Incapacitated, Gravely Ill Mother appeared first on Elder Law Attorney NJ | The Law Office of Donald D. Vanarelli.