Appellate Court Victory: Matter of James H. Supplemental Needs Trusts

In this Mental Hygiene Law article 81 proceeding, we successfully defended the petitioner/guardian on an appeal.  There, the petitioner was appointed as the guardian of James H.  After extensive litigation, the petitioner applied for and received an order awarding counsel fees and compensation for guardian services pursuant to Mental Hygiene Law § 81.28 (a).  In the same order, the petitioner also received authorization for those amounts to be paid from supplemental needs trusts (SNTs).  James H.’s brother, unsatisfied with the result, appealed. 

On the appeal, the appellate court affirmed.  Among other things, the appellate court concluded that the trial court provided a clear and concise explanation for its award in a written decision with reference to numerous factors, including the time and labor required, the attorney’s experience and ability, the benefit flowing to the incapacitated person as a result of the attorney’s services and the results obtained. 

In addition, the appellate court rejected James H.’s brother’s challenge to the trial court authorizing the payments from the SNTs or, in other words, approving the use of the SNTs for this purpose. The appellate considered the purpose of these trusts and the limitations imposed on them by law.  The appellate court also considered the specific provisions of the SNTs and the services provided by petitioner and her appellate counsel.

The appellate court found that the services benefitted James H. and were the types of services authorized to be paid for by the SNTs.  Among other things, the appellate court concluded that the petitioner’s services as guardian and the legal services provided by petitioner and her appellate counsel successfully resulted in the removal of James’ H.’s brother as trustee of James H.’s SNTs, and that James H.’s brother had been incredibly litigious, obstinate and consistently reluctant to pay James H.’s medical bills and expenses. In finding that the services benefitted James H., the court further concluded as follows:

“Upon [James H.’s brother’s] removal, petitioner was better able to ensure that James H.’s weekly needs were met, resulting in the timely and efficient payment of bills and coordination and receipt of services benefiting him, thus reducing James H.’s anxiety. More importantly, [James H.’s brother] was also the executor of their mother’s estate and, despite the fact that two years had elapsed since their mother’s death, [James H.’s brother] had not transferred James H.’s inheritance into his SNTs, leaving two of the SNTs unfunded. [The] removal further led to the subsequent significant funding of the SNTs, resulting in greater availability of funds for the payment of James H.’s necessities, such as health care, transportation and groceries, as well as personal items to enhance his lifestyle.”

As with any SNT, the appellate court recognized a chief concern was whether payment to a third party from the SNTs would render James H. ineligible for receipt of government benefits or assistance. The appellate court looked to Social Security Administration, Program Operations Manual System (POMS) as guidance and found that the payment from the SNTs would not render James H. ineligible for government benefits.


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