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finding that if the petitioner does not demonstrate her ability to afford the expenses of home ownership going forward, the application of the infant's funds not only dissipates the assets of the infant, "it also threatens to expose those assets to a significant risk of waste"
Summary of this case from In re Guardianship of A.S.B.Opinion
2016-854
07-09-2019
In the MATTER OF the GUARDIANSHIP OF B.E.S. (M.D.), Minor.
KAREN CROTTY PALUMBO, ESQ., Attorney for Petitioner, 1203 North Avenue, P.O. Box 110, Beacon, New York 12508 FREDERICK ST. CLAIRE CLARKE, ESQ., Guardian ad Litem, 222 Church Street, Poughkeepsie, New York 12601
KAREN CROTTY PALUMBO, ESQ., Attorney for Petitioner, 1203 North Avenue, P.O. Box 110, Beacon, New York 12508
FREDERICK ST. CLAIRE CLARKE, ESQ., Guardian ad Litem, 222 Church Street, Poughkeepsie, New York 12601
Michael G. Hayes, J. M.D. is the mother and guardian of the property of the infant, B.E.S. The Guardian has filed an Amended Petition seeking, inter alia , the authority to withdraw a lump sum from the infant's guardianship account (the "Account").
The Amended Petition identifies this lump sum as $34,292.32. However, the itemized statement provided in support of that lump sum request adds up to $44,086.60. The Court has not been able to reconcile the $9,794.28 discrepancy between the lump sum requested and the underlying itemization.
Specifically, the itemized statement seeks authority to make the following withdrawals from the Account: $15,863.00, as reimbursement for tuition payments that the Guardian made to the infant's private school (the "School") on his behalf for the 2017-18 and 2018-2019 academic years.
• $3,068.08, as reimbursement for medical bills that the Guardian has paid on behalf of the infant.
• $15,458.52, as payment of the amount due pursuant to the 2017 state and federal guardianship income tax returns.
• $8,100.00, as payment of the infant's tuition at the School for the 2019-20 academic year.
• $1,597.00, as payment of legal fees that the Guardian has incurred during the course of the guardianship.
The Amended Petition also seeks the authority to make a series of monthly withdrawals from the Account over the next three years totaling $138,099.78. The purpose of these monthly withdrawals would be to pay off the mortgage on the house located at [XXXXX] Avenue ("the house"). The Amended Petition states that these monthly payments would be made in 35 installments. Although not expressly stated, it appears that the first 34 payments would be in the amount of $3,991.00, and that the final installment would be in the amount of $2,405.78.
The house was owned by the infant's late father, W.S. At the time of his death in September of 2016, the house was valued at approximately $206,000.00.
Prior to his death, W.S. lived in the house with the Guardian and the infant. The Guardian and the infant have continued to live in the house for the two-plus years that have elapsed since W.S.'s death.
The Guardian was issued Letters of Administration on March 30, 2017. The infant is W.S.'s sole distributee. The house has not been placed on the market, title to the house has not been transferred, and the estate remains open.
The record indicates that the ward is thirteen (13) years old. Letters of Guardianship of the property were issued to M.D. on July 25, 2017. The current value of the infant's liquid assets, which are maintained in the Account, is $192,473.10.
The ward also receives social security benefits of $16,164.00 per year. The Guardian may use those social security payments for the infant's education and support without an order from the court [SCPA § 1713(3) ].
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In total, the Amended Petition seeks permission to make withdrawals of $182,186.38 (i.e., itemized lump sum withdrawals of $44,086.60, plus 35 installments totaling $138,099.78). These proposed withdrawals would essentially exhaust the assets that are currently being held for the ward's benefit in the Account.
The application for permission to use $15,458.52 of the guardianship funds to pay the 2017 state and federal guardianship income tax returns is granted. This income tax liability is a proper guardianship expense. ( Matter of Bilick , 176 Misc 2d 293, 298, 671 N.Y.S.2d 639 [Surrogate's Court, Sullivan County 1998] ).
The application for payment of legal fees is granted to the extent that the Guardian shall receive a payment of $1,409.50 from the Account, representing the legal fees that have been reasonably incurred during the course of the guardianship. The application for payment of an additional $187.50 in legal fees is denied, as the services that were provided in connection with those fees are not reimbursable guardianship expenses. ( Matter of Gilbert , 173 Misc. 750, 18 N.Y.S.2d 783 [Surrogate's Court, N.Y. County 1940] ; Matter of Decker , 37 Misc. 527, 531, 76 N.Y.S. 315 [Surrogate's Court, Delaware County 1902] ).
With respect to the application for reimbursement of past medical expenses, it is settled that parents have the primary
obligation to support their unemancipated children until the age of 21. (Turano & Radigan, New York Estate Administration , § 9.04 [c][2]; Family Court Act § 413. See also Matter of N.H.K. , NYLJ, July 13, 2011 at 30, col. 4 [Surrogate's Court, Kings County] ["A parent's obligation to support her child, even though such child has his own resources, is well-established"] ). Although permission to withdraw funds from a guardianship account lies within the discretion of the Court, "withdrawal is not favored absent unusual circumstances, as it is the duty of the court to preserve the infant's estate until his or her majority." ( Matter of John J.S. , 164 A.D.3d 676, 677 [2d Dept. 2018] ). Therefore, this discretion is exercised cautiously with an acute understanding of the Court's responsibility to preserve the infant's estate. ( Ahders v. Southampton Hospital , 90 A.D.2d 508 [2d Dept. 1982] ).
Here, the Guardian has not adequately demonstrated that paying the infant's past medical bills imposed an onerous burden on her, or that the assets of the infant's estate should be invaded to relieve the Guardian of this primary parental obligation. Therefore, the application for reimbursement of past medical expenses totaling $3,068.08 is denied.
"Pursuant to SCPA § 1713(1)(a), the Court may... direct application of the infant's funds for the education of the infant." (id .). In deciding whether to grant a request for permission to withdraw guardianship funds for educational purposes, the Court may take into account, inter alia , the parent-guardian's financial resources. (id .). "Another factor to be taken into consideration by the Court is the proportion of the child's property to the requested expenditure." ( Matter of S.B. , 33 Misc. 3d 440, 442, 929 N.Y.S.2d 847 [Surrogate's Court, Dutchess County 2011] ).
The Guardian states that the infant was born with a speech impairment, and that he suffers from a seizure disorder. The Guardian also states that W.S. was a high school teacher, and that the Guardian and W.S. both agreed that it was in the infant's best interest to enroll him in a private school with a good speech program.
The Guardian and W.S. originally enrolled the infant at a different private school. However, it closed while the infant was in fifth grade. As a result, the Guardian and W.S. enrolled the infant at the School. The Guardian has provided paid tuition bills as evidence of the infant's enrollment at the School. The Guardian has also provided a copy of the Individualized Education Services Program (IESP) that the local school district has prepared, confirming that the infant receives regular speech therapy services while at the School.
The Guardian states that, without the financial assistance that W.S. provided during his lifetime, she does not have the financial resources to continue to pay the infant's tuition at the School. The Amended Petition also indicates that the Guardian was making approximately $50,000.00 per year, but that she recently became unemployed. Finally, the Amended Petition states that W.S.'s death has been a traumatic experience for the infant, and that removing the infant from the School for his eighth grade year (i.e., his final year at this pre-K through 8 school) would cause the infant to suffer significant, unnecessary trauma.
The Guardian has made the requisite demonstration that the infant's best interests would be served by allowing him to complete his final year of education at the School. The Guardian has also made the requisite demonstration that she lacks the financial resources to pay the 2019-20 tuition. It is also significant that the 2019-20 tuition represents less than five percent of the infant's total funds. Therefore, the Amended Petition is granted to the extent that it seeks permission to pay the infant's tuition at the School for the 2019-20 academic year. (Matter of N.H.K. , NYLJ, July 13, 2011 at 30, col. 4 [Surrogate's Court, Kings County] [granting application to use guardianship funds to pay for private tutoring services, where the parent-guardian was a single mother of limited means, the funds requested represented less than five percent of the guardianship funds, and the evidence presented amply demonstrated that the infant was in need of academic remediation] ).
However, the Guardian has not demonstrated that paying the infant's past tuition bills imposed an onerous burden on her, or that the assets of the infant's estate should be invaded to relieve the Guardian of this primary parental obligation. Likewise, the Guardian has not demonstrated that the infant's best interests would be served by granting this reimbursement request. Therefore, the application for reimbursement of tuition payments totaling $15,863.00 that the Guardian previously made to the School for the 2017-18 and 2018-2019 academic years is denied.
Finally, "the provision of shelter falls squarely within the realm of ‘necessities’ that are properly provided by parents for their infant children." (Matter of C.R. , NYLJ, June 1, 2011 at 30 [Surrogate's Court, Kings County] ). As a result, an application by a parent-guardian to use the assets of the infant to purchase a home or to pay a mortgage will be closely scrutinized. With guidance from the law concerning applications to withdraw funds that infants receive from the settlement of an action [CPLR Article 12; 22 NYCRR § 202.67(f) ], the critical areas of inquiry with respect to this application include: (1) the proportion of the proposed withdrawal to the infant's total funds; (2) the parent-guardian's financial resources; (3) the relative proportion of the proposed contributions by the infant and the parent-guardian; (4) whether any tax or other financial advantages will accrue to the infant as a result of the proposed expenditure; (5) whether the house provides a unique or special benefit to the infant; and (6) whether the house represents a sound investment. (See Lee v. Brewer , 26 Misc. 3d 1216(A), 2010 N.Y. Slip. Op. 50106(U), 2010 WL 342639 [Supreme Court, Orange County 2010] ; Matter of Louis , 21 Misc. 3d 1126(A), 2008 N.Y. Slip. Op. 52246(U), 2008 WL 4821750 [Supreme Court, Kings County 2008] ; Matter of Pineda , 168 Misc. 2d 845, 640 N.Y.S.2d 969 [Supreme Court, N.Y. County 1996] ).
Here, the application would nearly exhaust the infant's funds, while shifting the burden of providing housing solely to the infant. Notably, although the application states that the Guardian was earning $50,000.00 per year prior to her recent loss of employment, it does not require her to make any financial contributions toward payment of the mortgage over the next three years, despite her plan to reside there with the infant. The Amended Petition does not identify any financial or tax advantages that will accrue to the infant if the application is granted. Although the Guardian represents that the infant has an emotional attachment to the house, there is no indication that the house offers the infant any unique or special benefits, and no psychiatric or other reliable evidence has been presented suggesting that the infant would suffer harm if the house was sold. Finally, the Amended Petition fails to provide any indication as to how the basic carrying costs and routine expenses of home ownership, beyond merely servicing the mortgage, would be paid. Accordingly, the application threatens not only to dissipate the assets of the infant — it also threatens to expose those assets to a significant risk of waste. Under these circumstances, the application for permission to pay off the mortgage is denied. (See Matter of C.R , NYLJ, June 1, 2011 at 30 [Surrogate's Court, Kings County] [denying application by parent-guardian to use 25% of the infant's funds to pay mortgage arrears on the family home]; Matter of Louis , 21 Misc. 3d 1126(A), 2008 Slip. Op. 52246(U), 2008 WL 4821750 [Supreme Court, Kings County 2008] [denying application by parent-guardian to use 40% of the infant's funds to pay mortgage arrears on the family home]; Cf . Matter of J.M.M. NYLJ, June 8, 2006 at 1, col.4 [Surrogate's Court, Bronx County 2006] [granting application by parent-guardian to sell a house that the infant inherited from his father, and to use the proceeds of that sale as a down payment for a new house, where: (1) the inherited house was in foreclosure, and the new house would be more affordable, (2) the new house was located in a better school district, (3) the inherited house and the new house represented the same type of investment, (4) the new house would be titled in the infant's name, and (5) the parent-guardian would be responsible for paying the mortgage on the new house]; Matter of M.H.H , 118 Misc. 2d 224, 459 N.Y.S.2d 1000 [Surrogate's Court, N.Y. County 1983] [granting application by parent-guardian to use 30% of the infant's funds to pay off the mortgage on the family home (a co-op in Manhattan) where: (1) the co-op had fallen into foreclosure following the death of the infant's father, (2) significant financial and tax advantages would accrue to the infant (including $70,000 in immediate tax savings, and $100,000 in unrealized capital gains) as a result of the transaction, (3) the infant would receive a one-half ownership interest in the co-op, (4) the co-op shares could not be pledged, transferred or otherwise encumbered, and the proprietary lease could not be assigned or sub-leased without prior court approval, (5) the co-op's enclosed grass yard provided the infant with a special and unique benefit that the parent-guardian would not be able to replicate at another apartment in Manhattan without an investment from the infant's funds, and (6) a psychiatrist submitted an affidavit stating that the circumstances surrounding the father's violent death had a significant traumatic effect on the infant, and that forcing the infant to move from the family home would cause him to suffer additional emotional and physical harm] ).
Based on the foregoing, it is hereby
ORDERED, that the request for permission to use guardianship funds to pay the 2017 state and federal guardianship income tax returns is granted to the extent that the Guardian is authorized to pay $15,458.52 from the Account for this purpose; and it is further
ORDERED, that the request for permission to use guardianship funds to reimburse the Guardian for certain legal fees is granted to the extent that the Guardian is authorized to receive a payment of $1,409.50 from the Account for this purpose; and it is further
ORDERED, that the request for permission to use guardianship funds to pay the infant's 2019-20 tuition at the School is granted to extent that the Guardian is authorized to pay $8,100.00 from the Account for this purpose; and it is further
ORDERED, that the Amended Petition is denied in all other respects.
The foregoing constitutes the Decision and Order of this Court.