Estate Planning | Wills and Estates | Trusts and Estates Law

FIDUCIARY COMPENSATION

“We don’t pay taxes, only the little people pay taxes.” Leona Helmsley

This is what Leona Helmsley’s summer house keeper testified that Mrs. Helmsley had previously said, during a 1989 tax evasion trial that resulted in Mrs. Helmsley serving 19 months in jail. At trial, her own lawyer described her as a “tough bitch”. Leona Helmsley was known as the “Queen of Mean” for her heaping cruelty meted out toward her employees in her real estate empire worth billions. She was legendary in penny pinching her employees, returning used shoes to stores for refund and gipping contractors that worked on her properties. When her only child died she served his widow with an eviction notice shortly after the funeral and took judgment against his estate for a debt and property that she claimed he had borrowed from her. It seems that while she was alive she paid no one fairly.

Mrs. Helmsley died in 2007. Her husband (number three) Harry, predeceased her in 1997. Fortunately for Mrs. Helmsley, she got what she wanted: he left her his entire estate estimated to be well over $5 billion.

Her estate plan was what one would expect under the circumstances. It cut out certain family members and manifest some rough edges. Mrs. Helmsley’s estate in large part was left to a charitable trust. Her Maltese dog, Trouble, was benefitted by a $12 million trust fund. It was reduced by the court as excessive based upon litigation and alleged lack of capacity. The court determination included providing benefit for some relatives.

In August 2019, the New York County Surrogate made a final determination on the application for judicial settlement of the final account of Mrs. Helmsley’s executors (See In re Judicial Settlement of the Final Account of Proceedings of Panzirer, 2019 N.Y. Misc. Lexis 4512). Ironically, the focus of the court’s attention was the matter of determining reasonable compensation for the fiduciaries.

Mrs. Helmsley’s will stated that her executors were not to receive statutory commissions. Instead, her will stated:

“Any one or more executors…may render services to the Estate…as an officer, manager or employee of the Estate…, or in any other capacity, notwithstanding the fact that they may appoint themselves to serve in such capacities, and they shall be entitled to receive reasonable compensation for such services. No such person shall be required to furnish any bond in connection with such employment.”

The executors commenced a proceeding to be paid and filed their account. The executors asserted that the estate was mammoth and highly complex and that they were responsible for enormous risk and potentially exposed to personal liability. Thus, they sought $100 million ($25 million each). This was based on well settled law in New York, concerning established factors on which reasonable compensation is to be determined (See In re Estate of Freeman, 34 N.Y.2d 1, 311 N.E.2d 480, 355 N.Y.S.2d 336 [1974]; In re Potts’ Estate, 213 A.D. 59, 209 N.Y.S. 655 [4^thDept 1925], affd 241 NY 593, 150 N.E. 568 [1925]).

The Attorney General objected. The Attorney General did not allege impropriety, but instead claimed that the amount sought was not “reasonable compensation.”

The argument made was that a proposed methodology akin to quantum meruit should apply. Only time spent should be considered, rather than the long standing law favoring multi factor analysis. According to the Attorney General, her theoretical time and rate based formula should determine the result.

In a well reasoned and thoughtful determination the Surrogate crushed the opposition of the Attorney General, rejecting it entirely, as “misguided at best” and “simply wrong.” The Attorney General argued that the compensation “should be based on a simple arithmetic formula which considers only the reasonable amount of time spent multiplied by an appropriate hourly rate.” Incredibly, the Attorney General further argued that the court should appoint an expert to advise on the reasonable value of each executor’s contribution to the estate, based upon services actually rendered and based on the individual knowledge of and skills of each.

The position taken by the Attorney General was baseless and incredibly wrong. The determination of the court reflects a displeasure with the arguments lacking any legal support. The court stated that the Attorney General herself, self promulgated certain “guidelines” that the court found to simply be “unworkable”, and “which would foist an unwieldly time consuming and costly process onto the parties and the estate.” Further, rejecting the notion of appointment of an expert, the court found that would involve the retention of additional professionals to help the expert, necessitate more discovery, and possibly a hearing – all at the additional expense of the estate. Finally, the court reminded the Attorney General that the Surrogate is uniquely qualified to determine fiduciary compensation based upon the reasonable compensation standard. The court does that routinely in these cases. The Legislature conferred that authority to the court (see SCPA 1412(7) re preliminary executors, 2312 re corporate trustees, and 2110 re attorneys).

Despite the efforts of the Attorney General, Leona Helmsley’s fiduciaries will be fairly compensated after all.

Business Succession Agreements

It is important for businesses to plan ahead. It is especially true to plan for those events that are foreseeable. Whether we want to admit it or not, there will come a time when we will no longer be able to continue working. It is also true of business owners. But what happens to the business when the founder or key member of the company retires, has a serious illness or dies? That is where the business succession agreement comes into play.

A business succession agreement can address a multitude of issues that may arise when there is a change in the business’s management. Among other things, it can specify what the roles and responsibilities of the new controlling members will be and under what circumstances the succession plan will be implemented.

It can be especially difficult when these events involve family businesses. If not properly addressed in a succession agreement, litigation between family members may arise or the family business may not survive. For example, in Crabapple Corp v Elberg (153 AD3d 434 [1^st Dept 2017]), siblings became embroiled in litigation over who would become the managing member of the family’s business after the death of their father. There was no succession agreement regarding the management of the LLC in the event of the death of their father, the majority member.

Ruben Elberg, the son of Jacob Elberg, asserted that he was the sole managing member of the LLC. His sister, Tamara, as co-executor of their father’s estate, asserted that their father was the sole owner of the LLC and that she was the LLC’s co-manager by virtue of her status as the co-executor, along with Ruben. The record demonstrated that Ruben was a minority member and not a managing member. Pursuant to Limited Liability Company Law § 608, the executor of a deceased member may exercise all of the member’s rights for the purpose of settling his or her estate. Therefore, the Court held that their father’s controlling interest in the LLC passed to his estate upon his death, and Ruben and Tamara, as co-executors of the estate, both had authority as co-managers of the LLC.

Even where a succession agreement exists, if not carefully drafted, litigation may still occur. In Shyer v Shyer (2019 NY Misc LEXIS 4022 [Sup Ct, New York Co, July 18, 2019]), after the death of Robert, one of the four siblings who owned and managed Zyloware Corporation, the company filed a third-party complaint against his widow, the preliminary executrix of his estate, in her individual capacity, for among other things, wrongful interference with a contract.

In Shyer, the Shareholders Agreement and Master Executive Employment Agreement the siblings entered into were to formalize the succession of leadership in the company. Pursuant to the Shareholders Agreement, the company informed Robert’s estate that it intended to purchase his remaining shares along with the price it was willing to pay for those shares. Robert’s widow, on behalf of the estate, rejected the company’s terms. She claimed that the company’s offer breached the Shareholder Agreement. The company claimed the estate’s actions breached the agreement as it “ran contrary to the Shareholders Agreement.

The company alleged that the widow, in her individual capacity, improperly interfered with the Shareholders Agreement by inducing the estate to breach the shareholders agreement by failing and refusing to deliver the shares to the company no later than the Closing. The company alleged that the widow procured the estate’s breach by forcing and directing the estate to act contrary to its contractual obligations. The company alleged that she, as preliminary executrix, caused the estate to breach the agreements.

The company argued that the widow was implicated in her role as preliminary executrix of the estate since the estate could act only at her behest as she was the “sole executor” of the estate. The company claimed that the estate’s actions in allegedly breaching the shareholders agreement could not be “decoupled” from the widow’s ordering the estate to do so.

The court however reasoned that the claim that the widow interfered with the Shareholders Agreement was tantamount to a claim that she should be held personally liable for the estate breaching the Shareholders Agreement. It held that the widow’s actions did not describe the procurement of a breach, but the breach itself.

Under New York Estates Powers and Trusts Law § 11-4.7(b), a personal representative is individually liable for obligations arising from ownership or control of the estate or for torts committed in the course of administration of the estate only if she failed to exercise reasonable care, diligence and prudence.

The court held that the company’s claim threatened to circumvent the statutory standard for imposing personal liability on estate administrators. The company’s allegations against the widow stemmed from her “control of the estate or for torts committed in the course of administration of the estate.” The company did not allege that the widow “failed to exercise reasonable care, diligence, [or] prudence.” Although the court dismissed the company’s claim against the widow in her individual capacity, it did go on to say that the company could still sue the estate for breach of contract.

Planning for succession in a business, including a closely held family business, can help ensure the continuity of the management and operation of the business long after the founder or majority manager is gone.

Contribution by Jacque K. Vincent, J.D.

Renunciation Of An Inheritance Part 1

Most people welcome receiving an inheritance, but there are times when an inheritance causes problems for the beneficiary. Some beneficiaries want to avoid receiving their inheritance for tax purposes, while others may want to avoid paying a creditor. “Motives or reasons for the renunciation have no bearing on this statutory right, as long as no fraud or collusion is involved.” Matter of Oot, 95 Misc 2d 702, 705 (Sur Ct, Onondaga County 1978).

Matter of Rosenberg, 2016 NY Misc LEXIS 261 (New York County, January 27, 2016) is an interesting case that involved renunciation for estate tax purposes. In this case, the decedent Paul Rosenberg, a Jewish art collector and dealer who lived in France, owned two paintings by Henri Matisse. In 1940, the Nazis confiscated the paintings. In 2012, the paintings were discovered and determined to belong to the Rosenberg’s who had immigrated to New York. The paintings were valued at over $12 million.

Paul Rosenberg died in 1959. Paul bequeathed half of his residuary estate to his son Alexandre or, in the event that Alexandre did not survive him, to Alexandre’s children. Alexandre died in 1987, survived by his wife and children. Alexandre bequeathed his residuary estate to his wife or, in the event that she disclaimed her interest, to a Marital Trust for her benefit. Alexandre’s wife did indeed disclaim, and as a result, his children were to receive any assets that pass as part of his residuary estate.

Alexandre’s wife petitioned the Surrogate’s Court to permit Alexandre’s estate to renounce an interest in the newly discovered paintings and any works of art discovered in the future that would be found to be assets of Paul’s estate. Her reason for the renunciation was to spare her children the cost of estate tax that would be payable otherwise. EPTL 2-1.11 (c)(2) gives the court discretion to extend the time to file and serve a renunciation upon a showing of reasonable cause. Here, the Court held that the extraordinary circumstances of this case warranted its allowance to extend the petitioner’s renunciation of assets found in the future.

Subsequently, in 2014, after the Rosenberg family learned about the discovery of several stolen pieces of art held by a German citizen, the Court granted renunciation to the estate of Alexandre.

Renouncing a property interest for purposes of avoiding creditors is also permissible. In Matter of Oot, Patricia Hoopingarner worked for William Prescott, the petitioner, as a receptionist-bookkeeper from 1972 to 1976. In 1976, the Prescott discovered that Hoopingarner had misappropriated over $40,000. Hoopingarner signed a confession of judgment which was filed in the Clerk’s office. In 1978, her mother, Marion Oot, died and Hoopingarner was named as a legatee under the will.

As long as the beneficiary has not accepted the disposition, a legatee has a statutory right to renounce any gift made by a will (EPTL 2-1.11). Hoopingarner filed a renunciation under the will to avoid paying the judgment against her. Prescott sought to set aside the renunciation as a fraudulent conveyance. The Court held that “the fact that the renunciation of a legacy might frustrate the claims of creditors is of no consequence if the statutory renunciation procedures have been meticulously followed.” Id. at 706.

By Jacque K. Vincent, JD

Renunciation Of An Inheritance Part 2

What happens when a person renounces a bequest?

Filing a renunciation has the same effect with respect to the renounced interest as though the renouncing person had predeceased the testator unless a provision relating to a possible renunciation is included in the will. In other words, if you decide to renounce your bequest, you will be treated as if you died before the grantor did, and your share is redistributed according to the terms of the will.

In Estate of Cooper, the decedent left residuary shares of his estate to his three daughters. He did not provide any provision relating to a possible renunciation of a bequest in his will. When one daughter renounced her bequest, that portion of the estate went to her children. Estate of Cooper, 73 Misc 2d 904, 906 (Sur Ct, Onondaga County 1973).

Because the daughter’s renunciation of the bequest was treated as if she had predeceased her father, the disposition vested in her surviving children, per stirpes, in accordance with the antilapse statute.

The antilapse statute provides that where a testator has made bequeaths to his issue or his siblings, and the beneficiary dies before the testator, the deceased beneficiary’s disposition vests in his surviving issue. EPT § 3-3.3.

By Jacque K. Vincent, JD

Renunciation Of An Inheritance Part 3

Unintended Consequences of Renunciation

One issue to note is that renunciation can negatively impact a distributee’s eligibility for Medicaid benefits or other public assistance. In assessing need and eligibility, the Department of Social Services will consider any financial asset or resource the applicant may immediately or potentially have available. Courts have held that a recipient of public assistance is obligated to utilize all available resources to eliminate or reduce the need for public assistance. Although when a distributee renounces his inheritance and the disposition never vests, the Courts still allow Social Services to consider the inheritance as a potential resource for the applicant when determining eligibility. Molly v Bane, 214 AD 2d 171, 176 (2d Dept 1995).

Something else to be aware of is that proceeds recovered from an action for wrongful death cannot be renounced. Renunciation is limited to the distribution of testamentary or administration assets. Since proceeds from a wrongful death action are not passed through a testamentary instrument, renunciation is not applicable. In re Estate of Summrall, 93 Misc 2d 420 (Sur Ct, Bronx County 1978).

By Jacque K. Vincent, JD

Damn the Torpedoes (40 Years Later) and Full Moon Fever (30 Years Later)

When Tom Petty tragically died of a drug overdose in 2017, he left a wife, Dana York Petty, and two daughters from his first marriage, Adria and Annakim. He also left a catalogue of music that his fans crave for, including the anticipated album “Wildflowers – All The Rest”, which was to feature unreleased tracks from the original “Wildflowers” recording session. The release was intended to coincide with the 25th year anniversary of the release of the Wildflowers album on November 1, 1994.

Tom Petty appears to have engaged in some substantial estate planning over the years. His trust named his second wife Dana as his sole successor trustee. Since his death, she served as trustee. His trust directed that Dana was empowered and directed to “create a California limited liability company (or such other entity as the Trustee deems appropriate) … to hold [Tom’s] Artistic Property”.

Tom gave Dana broad discretion in creating the entity, the execution of an operating agreement and establishing a governance structure. Tom provided only one caveat: that Dana, Adria and Annakim “shall be entitled to participate equally in management”.

The estate plan seems solid and simple enough. His fans eagerly await each release of subsequent Tom Petty compilations. Since his death in October of 2017, two complications have been released. Now the release intended for this coming November is in jeopardy and at risk and it seems that an unraveling of the planning of Tom’s estate is the heart of the problems.

The court filings and other reports indicate that Adria has apparently changed her mind on key decisions, including her stated intention to delete “and the Heartbreakers” off the artist name on one of the prior complications. She emailed two founding members of the Heartbreakers on that subject and stated: “what I don’t have the temperament for is having my entire life raped. Being disparaged. My dad being disgraced. And being surrounded by selfish, unreliable people and drug addicts.” Adria has stated an intention to delay and postpone release of “Wildflowers” and has gone further, stating to record executives that she will be taking over control of the estate in short order.

It all seemed so clear when Tom provided his lawyers with his instructions and they presumably wrote them into the documents correctly and clearly. Certainly there was no room for interpretation or ambiguity. Three people shall be entitled to participate equally in management.

According to Adria and Annakim, participation equally means just that. Each person has one vote in the management decision making. Adria has texted that all decisions shall be “majority rule” and that it will be smoothly run as a result. They argue that this was Tom’s intention and his words were clear.

On the other hand, Dana argues that Tom did not intend to give his daughters the right to rule by majority and he did not intend to disenfranchise Dana entirely. She argues in her petition filed with the court that “equal participation in management can only be ensured by requiring consensus for significant decisions; otherwise the opportunity of the majority – Tom’s daughters from his marriage to Jane- to abuse and exclude [Dana’s] minority position, which will inevitably lead to endless litigation, would be a virtual certainty”.

What happened here? Did the drafting attorney fail to consider the family dynamic of children from a prior marriage managing a business with the second spouse?

From a litigation standpoint, the LLC concept should be clearly defined in order to reduce the chances of what seems to be a highly likely dispute in a case like this. Second spouses and children from a first marriage are harbingers of estate litigation. Knowing this, the drafter could have specifically designated the second spouse and the two children from the prior marriage as the co-managers of the LLC and that each manager has one vote – if that was the intention. Otherwise, if the creator of the trust intended operations to be in perfect harmony, he could have said so. He could have specified that management decisions must be unanimous. While that seems a set up for paralysis, it could have been his intent that his highly valuable and substantial artistry collection be managed and operated in a holistic and collaborative fashion.

This type of estate plan could have also added a tie breaker and deadlock breaker provision. If desired, the creator of this type of plan could have included a dispute resolution provision with requirement first for a friendly mediation facilitated by a third party neutral and then for arbitration.

How the Safe Act Impacts the Transfer of Firearms In an Estate

Inheriting a firearm can be a complicated process. A fiduciary of an estate cannot just give the firearm directly to an heir without the risk for potential criminal liability. Unlike other personal property, passing firearms on to a loved one after the death of the owner has its own unique rules and can be a challenge to the estate’s fiduciary if not specifically addressed during the estate planning stage.

New York’s Secure Ammunition and Firearms Enforcement Act, better known as the SAFE Act, can create the risk of criminal liability for executors and administrators as well as for the estate’s heirs where the parties are unaware of the rules.

Pursuant to the SAFE Act, a fiduciary must lawfully dispose of the firearm within fifteen days after the death of the owner. If the fiduciary is unable to transfer the firearm to the heir within fifteen days, the firearm must be surrendered to a law enforcement agency. The law enforcement agency will hold the firearm until the heir is licensed or otherwise permitted to take possession. However, if the agency does not receive a request to deliver the firearm within one year of the delivery, the firearm will be deemed a nuisance and destroyed (NY Penal Law § 400.05[6]). Fifteen days is a relatively short amount of time in which to make the transfer because a fiduciary cannot lawfully transfer or dispose of a firearm until he has been appointed by the Court.

Before the firearm can be given to the heir, the fiduciary must (1) know that the decedent legally owned the guns; (2) know that the specific beneficiary of the guns may legally own a gun and (3) adhere to proper transfer procedures. The heir receiving the decedent’s firearm must hold a valid New York State gun permit. Illegal possession of a decedent’s registered firearm without following the statutory protocol for estate transfer to an heir is a misdemeanor, specifically, criminal possession of a weapon in the fourth degree (NY Penal Law § 265.01).

In addition to a state firearm permit, a federal background check is required for a firearm to be transferred. But there is an exception to his rule when it comes to transfers between immediate family members such as spouses, domestic partners, children and step-children (General Business Law § 898).

Contributed by Jacque K. Vincent, J.D.

Trust Funds for Pets: It’s Not All Doggie Bones and Biscuits

Estate and trust litigation can occur for a variety of reasons. A trust fund dog named ‘Winnie the Pooh’ experienced this first hand. There, the trust manager and the pet’s new caretaking fought over the frequency and amount of money distributed from the trust.

The dog’s owner had set up a trust for $100,000 for the dog with the remainder for an animal hospital. The dog’s caretaker reportedly ended up having to sue the estate’s executor after he allegedly failed to make trust payments for the dog’s care. The caretaker further alleged that the executor had refused to provide records relating to the trust and the pet’s medical history, and that the executor was favoring the remainder beneficiary. The executor denied the allegations and blamed the caretaker for the confusion.

The merits of a case like this will depend largely on the fiduciary’s legal obligations under the law and the specific terms of the trust. Of importance would be the degree of discretion afforded to the trustee in the trust instrument for making payments. The parties should retain records to support their position, including copies of letters, payments, receipts, demands, refusals, and bank records. Relying on ‘he said, she said’ evidence will end up costing both sides a lot in legal fees, and it may even significantly reduce the trust if the judge awards attorney’s fees out of it.

Family members or remainder beneficiaries may also attempt to challenge a pet trust that leaves a large sum of money to a pet. Leona Helmsley left twelve million dollars in trust to her “beloved Maltese, Trouble.” The court held that twelve million dollars was excessive and reduced the amount to only two million dollars.

Another owner reportedly left $4,761,346 in trust for two cats (see Matter of Abels, 44 Misc 3d 485 [Sur Ct, Westchester County 2014]). The executor of the will argued that based on the cats’ life expectancy and estimated costs, the amount of the trust should be reduced to $440,000. The executor also argued that by selling the mansion and relocating the cats to a smaller residence, the tax liability could be reduced and the charities could receive more.

The judge denied the executor’s request to reduce the trust. The judge held that the decedent’s intent was clear and should be followed. The judge reasoned that the pet owner wanted the cats to live in the house they were comfortable in and made specific arrangements for this. The judge concluded that it was not the court’s place to “rewrite the decedent’s will” and to give more to the charities than the decedent intended.

Luckily, justice prevailed for these cats. They were able to stay in their mansion and enjoy their lives in luxury.

Trust Funds for Pets – What’s Next? Dogs in Tuxedos?

Historically, New York hindered pet owners from providing for their pets after death. If money was left to a pet in a will or trust, the courts would simply ignore it. A pet owner could only request that the money be used for the pet’s care. The problem was that the person designated to help the pet could decide to disregard the decedent’s wishes and instead discard the animal.

In 1996, New York finally recognized pet trusts. This meant that a trust could now be used to protect a pet from being abandoned or left at a shelter. Better yet, a trust could be used to continue a pet’s standard of living and provide it with treats and toys for the rest of its life.

Pet trusts operate largely like any other trust. A person is named as a trustee to act as a manager and distribute the trust funds. The trust has a beneficiary. The trust also contains terms for the trustee to follow. Such terms may include the brand name of pet food, the type of snacks, a schedule for eating and grooming, the name of the boarding facility to place the pet if the custodian goes on vacation, pet medications, and end-of-life care.

There are however two unique components to pet trusts. First, unlike human beneficiaries, pets cannot assert their own rights or hire counsel. The pet trust law (NY EPTL § 7-8.1) therefore provides for an enforcer to enforce the trust terms. Second, the courts may reduce the size of the trust if it is excessive.

So, now that pet trusts are valid, what’s next? Tax deductions for doggie day care? Hamsters with checking accounts? Turtles with charge cards? Cats on deeds? Marriage certificates? Well, that just sounds crazy! But only time will tell. Until then, we will have to settle for make-believe, dressing up our pets in silly little outfits like mini-tuxedos and treating them like children.

Do You Trust Your Brother?

The names are different, but the facts are often the same. Unfortunately, more often than not, the outcome is also the same. The outcome does not have to be the same in every case. The maxim: an ounce of prevention is worth a pound of the cure is sadly most fitting.

Illness / Rely on family

Floyd W. Fisher was diagnosed with stage IV lung cancer in July 2015. Shortly after his diagnosis Floyd named his brother Larry Duane Fisher as his agent under a durable power of attorney. This document, which is very common, gave Larry complete control over his brother’s affairs. Presumably this was a sound decision. Larry had been a deputy for the Kit Carson Sheriff’s office. Larry told Floyd’s daughter not to worry and promised her that when her father died, he would handle the estate and file a probate case with the court. Certainly, the family was relieved that Floyd’s affairs would be handled in a competent trustworthy manner by a family member with a law enforcement background.

Death / Suspicion

Later that year in December, Floyd died. With no probate having been filed by Larry, Floyd’s daughter petitioned the court to handle his estate. After her appointment she found out the truth.

The truth

Larry stole from his deceased brother’s estate. He drained a bank account with more than $200,000, established for his brother’s care and treatment, down to $13.59.

He sold a piece of real property that had been in his brother’s wife’s family for generations to obtain funds for Floyd’s care. Almost $200,000 from that sale was earmarked for “the sole purpose of Floyd’s care and benefit and to pay his medical bills”. Larry changed the address on the account to his home and began to transfer the funds to several different accounts, including one for his teenage son.

Larry bought a Toyota truck for about $45,000 and purchased multiple guns with his brother’s money.

The outcome

In the end, the total amount spent from the account on Floyd’s care was $13,192.15, which included the cost of his funeral, $4,870.

In May 2017, Floyd’s daughter filed a criminal complaint against her uncle Larry. On December 6, 2018, Larry was found guilty by a jury in Denver Colorado of felony theft.

While the outcome may be just, it is unfair to the victims and leaves the family of the decedent with no real remedy if they cannot cover the assets.

What can be done to prevent this?

Prevention

The outlook and suggestions presented on prevention is based upon experience in litigation of this nature.

Retain a respected and experienced lawyer knowledgeable in the planning practice area. Great resources for referrals to those professionals are other lawyers, CPA’s, bankers and asset or investment advisors.

Do not make the decision to grant a power of attorney to anyone lightly – including family and particularly, “friends”. In many instances, friends and family are unsuitable agents due to conflicts, family animosity, jealousy and insatiable temptation. Professional advice concerning suitability of the intended agent is highly beneficial and can prevent a bad outcome. Using a professional can allow for a background check, credit check or other appropriate inquiry into the proposed agent – before the documents are signed.

Consider appointment of a disinterested person. Family members often are willing to serve for free. Why? Indeed, in many instances the principal does get what he pays for. When family members or friends offer to serve for free the professed altruism must be critically assessed. An agent can be compensated by the principal. Fair, but nevertheless relatively modest compensation has the potential to expand the class of persons suitable to serve as an agent.

Consider utilizing more than one person. New York law allows for more than one agent to be nominated and for the principal to decline to allow them to act separately. At the outset two individuals may be appointed to act together. Consider checks and balances and perhaps a monitor to review and supervise the actions of the agent. Any agent suitable for consideration for appointment must be a person absolutely trusted.

Split the duties among a small number of trusted people or create some redundancy so that more than one person has knowledge of the finances and the transactions as they occur. An easy measure that affords a lot of potential protection is requiring that more than one account statement be issued each month and that they be mailed to different persons. For example, the agent and the principal’s accountant.

Do not appoint a person susceptible to creditors, predators, greed or temptation.

Avoid new “friends” who are merely acquaintances. For example, a new home health aide, handyperson or other similar service provider or helper.

Involve professionals. Consider utilization of a banker, lawyer, CPA or other similar professionals who are regulated, supervised or licensed, and often insured.

Another option to consider is a springing power of attorney instead of a present grant of total control. The benefit of this technique is that the power is not granted to the agent until the happening of an event – often a medical or capacity related decline.

Conclusion

With counsel, Floyd might have been better advised to establish a trust. There was no indication that he lacked the capacity to do so. He certainly had sufficient assets to justify the effort and the work. A trust for his benefit during his life might well have prevented all of the harm. He could have nominated a local bank to act as the trustee during his life. This approach would have almost certainly prevented the outcome here.