A New York trial court requires a trustee to reimburse a special needs trust for nearly $180,000 that was misspent on private caregivers, cab rides, and medications that could have been obtained from government sources. Liranzo v. LI Jewish Education / Research (N.Y. Sup. Ct., Kings Cty., No. 28863/1996, June 25, 2013).
Eirol Liranzo was injured as a child. In 2003, $422,012.54 remaining from the settlement of his personal injury lawsuit was placed into a special needs trust for his benefit. The trustees were authorized to spend not less than $1,500 a month on Eirol's living expenses, but the trust also specifically stated that the trustees must make a good-faith effort to determine whether Medicaid would cover home health care services prior to expending trust funds for that purpose. The trust also required the trustees to take Eirol's eligibility for government benefits into account before making discretionary payments to him or his family.
By 2009, only $3,253.03 remained in the trust. When BNY Mellon, the trustee, filed an order requesting that the court approve its account and release it as trustee, the court opened an investigation. The independent examiner discovered that BNY Mellon had paid for $118,064.50 worth of home health care without making an inquiry into whether Eirol could qualify for Medicaid payments for his care. BNY Mellon had also paid for $56,320 worth of cab fares for Eirol's family and had made payments to the family that rendered Eirol ineligible for SSI and Medicaid.
The Supreme Court of New York, Kings County, rules that BNY Mellon must repay the trust for $176,905.99 that it improperly spent while it was trustee. The court finds that "it is clear that the trustee relegated [its duties] to others, failing to make the necessary inquiries to ensure the longevity of the Trust Fund. It is clear to the Court that BNY breached its duty under the Trust agreement and failed to properly administer the Trust."
Thank you to New York City ElderLawAnswers member attorney Robert M. Freedman for bringing the ruling to our attention.
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