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.

Does the AIP have to cooperate during an Article 81 guardianship proceeding?

Can the alleged incapacitated person (AIP) refuse to comply with information requests from the court evaluator or the other parties during a guardianship proceeding? 

This issue arose in Matter of Aida C. 44 AD3d 110 (4th Dept 2007), where the AIP asserted that her liberty interest was at stake and she therefore could not be compelled to speak to the Court Evaluator without violating her constitutional rights against self-incrimination.  The Fourth Department disagreed, concluding that the AIP’s constitutional rights against self-incrimination were inapplicable in the guardianship proceeding.  The court reasoned that the case was civil (rather than criminal), and that any confinement would be for the purpose of care and treatment rather than punishment.

The Fourth Department nevertheless held in Matter of Aida C. that the trial court lacked the power to compel the AIP to meet with the court evaluator, reasoning that Mental Hygiene Law Article 81 did not impose any such affirmative obligation on the AIP.  The Fourth Department further held that the trial court erroneously sought to punish the AIP for her failure to cooperate with the court evaluator, concluding that the AIP was not a “party” to the guardianship case so as to permit civil contempt against the AIP under Judiciary Law § 753 and that the petitioners failed to establish that they had sustained any redressable injury for which to punish the AIP.

Similarly, In Matter of Parker, 162 Misc2d 733 (Sup Ct, Onondaga County 1994), the petitioner objected to the dismissal of the petition as defective.  During oral argument, petitioner’s counsel asserted that the AIP had refused to divulge his financial resources.  In response to this argument, the court concluded in its decision that “it is certainly within [the AIP’s] rights to maintain the confidentiality of such personal matters [and that] his refusal in this area may be some indication of awareness as opposed to incapacity” (id. at 735).

Recently, in Matter of Elizabeth TT. (Suzanne YY.–Elizabeth ZZ.), ___AD3d___, 2019 NY Slip Op 06667 [2019]), the Third Department concluded that the AIP could not be forced to undergo a neuropsychological evaluation or compelled to testify against her own interests, concluding that there was no duty for an AIP to abide by a court evaluator’s recommendation that he or she undergo a neuropsychological evaluation to assess his or her present cognitive condition.

The courts have also struggled with deciding whether an AIP may be compelled to testify at the hearing.  In Matter of Heckl, 66 AD3d 1344 (2009), the Fourth Department held that the trial court may compel the AIP to testify at the guardianship hearing.  However, this conclusion has been rejected by several other courts.  In Matter of Elizabeth TT., for example, the Third Department concluded that there was no statutory requirement in Mental Hygiene Law article 81 that compels the AIP to testify at a hearing and that a petitioner must rely on other evidence to meet his or her burden. 

Similarly, in Matter of A.G., 6 Misc 3d 447 (Sup Ct, Broome County 2004), the court agreed that an AIP cannot be forced to testify in an article 81 proceeding.  The court relied upon federal and state constitutional grounds and the statutory right against self-incrimination incorporated in CPLR 4501, among other things.

In addition, in Matter of G.P., 37 Misc 3d 418 (Sup Ct, Dutchess County 2012), the court strongly criticized the court’s reasoning in Matter of Heckl and concluded that AIP could not be compelled to testify as a witness.