Court Curtails Use of Incompetent’s Settlement (NY)

Most parents who serve as court-appointed guardians for their disabled child would know what is in their child’s best interest and would use settlement proceeds to advance those interests.  But that does not mean that courts will abdicate their oversight responsibilities.

In the Matter of the Application of Geoffrey M. and Jordanna M. involves Sigal M., a girl who suffers from cerebral palsy, quadriparesis, microcephaly, and other developmental issues.  Previously, she had been adjudicated incapacitated under Mental Hygiene Law 81.02(b), and had received a structured settlement.  The amount in the estate at the time of this decision was approximately $8 million.  Sigal’s parents, who are also her co-guardians, sought to use a portion of those funds to pay $33,349 on the bat mitzvah party for her and 237 guests, and $60,000 on a trip to Israel for Sigal, her family, and an aide.

The Nassau District Court rejected the request.  In reaching its decision, the court considered two approaches.  The first, followed by the First and Second Departments, limits withdrawals to necessities and education that cannot otherwise be provided by the parents.  The second, articulated by Court of Claims Judge David Weinstein focuses on the best interests of the child.

Noting that Article 81 is silent with respect to extraordinary expenses such family holidays and culturally significant milestones, the court focused on the necessity of preserving the estate for the child.  For that reason, and because Sigal’s parents were people of means, the court denied the parents’ request to use the money to pay for the bat mitzvah and limited the amount of funds to be used on the vacation.  Expenses for the daughter, her aide, and her mother were appropriate, but the court refused to allow expenses for the parents’ hotel room, and expenses related to Sigal’s siblings.

Most parents believe they know what is best for their children, but courts have oversight responsibilities.  When a guardian spends a disabled person’s money, courts will scrutinize whether the expenditures are for the disabled person or their family as a whole.  Based on this decision, even when a disabled person has a major life event on the horizon, their guardians would be well advised to keep estate expenditures as ordinary as possible.

Thanks to Mike Gauvin for this post.  If you have any questions, please email Paul at pclark@wcmlaw.com