In a case touching on “almost every issue regarding health care planning for an elderly, incapacitated person,” a New York surrogate's court orders an attorney-in-fact to return $165,302.76 from Totten trusts that she liquidated for her mother's benefit shortly before the owner's death, but rules that the proceeds from the sale of the decedent's apartment that were also transferred to the attorney-in-fact's mother contrary to the decedent's intent do not have to be returned. In The Matter of the Accounting by Joan K. Conklin as Attorney-in-Fact for Julius Gargani, a/k/a Julius J. Gargani, Deceased (N.Y.Surr.Ct., Nassau Cty., No. 2010-363395/E, March 31, 2015).
Joan Conklin was Julius Gargani's cousin and apparent paramour. Mr. Gargani's will left all of his personal accounts and belongings, as well as his remainder estate, to Ms. Conklin, but it directed that his cooperative (co-op) apartment should be sold and the proceeds should be distributed to his two children and his ex-wife. Mr. Gargani also had multiple Totten trust accounts naming his children and other parties, as well as Ms. Conklin, as individual beneficiaries.
In early 2010, Ms. Conklin's daughter, Lori, contacted a lawyer and worked with him and her mother to prepare a new power of attorney naming Ms. Conklin and Lori as Mr. Gargani's agents. The pair also discussed Medicaid planning with the attorney, who met with Mr. Gargani for only 30 minutes on the day that the power of attorney was signed. The new power of attorney contained a properly executed major gifts rider giving the agents authority to make gifts to themselves, but it did not specifically authorize the agents to make changes to Totten trusts, as required by New York law. After Mr. Gargani signed the power of attorney, Lori liquidated almost all of the Totten trust accounts (but not the ones naming her mother as a beneficiary) and placed them into an account in Mr. Gargani's individual name. She also sold his home and placed the money in a similarly titled account. Mr. Gargani died on August 30, 2010, at which point his heirs discovered that the money was missing from the Totten trust accounts and that they would not receive the proceeds from the sale of the co-op because it was now part of Mr. Gargani's residuary estate that passed to Ms. Conklin. The other heirs challenged Ms. Conlin's accounting as executor and attorney-in-fact.
The Nassau County Surrogate's Court agrees that Lori had no authority to liquidate the Totten trust accounts because the gift rider didn't contain the proper language and so orders the return of $165,302.76 plus interest. The court finds that "the agent breached her fiduciary duty when she closed out almost every Totten trust account except for the accounts in trust for her mother." However, when it comes to the co-op, the court finds that "it is unfortunate that the act taken by an agent, who ultimately intended to benefit her mother and/or herself, caused the bequest [of the co-op] to adeem, but the court is powerless under these circumstances to reach a different result. . . The court cannot find, in light of the testimony at the hearing, that the agent abused her fiduciary duty when she sold the cooperative apartment. The attorney testified that the decedent understood that the property had to be sold to effectuate Medicaid planning." “Seldom does the court have before it a proceeding where almost every issue regarding health care planning for an elderly, incapacitated person is seen,” the court states.
For the full text of this decision, go to: https://law.justia.com/cases/new-york/other-courts/2015/2015-ny-slip-op-25094.html
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