An attorney in New York State was appointed to be the guardian of a woman who could not handle her own affairs. One day, the attorney and one of his employees visited the woman at her nursing home, took her out for a walk, and bought her an ice cream cone. The attorney then sent the woman's estate his bill for the visit: $1,275.
This is just one of the abuses uncovered in an investigation of court-appointed guardians and other judicial appointees known as 'fiduciaries' in New York State. According to two reports released by New York's chief judge, Judith S. Kaye, the state's system designed to safeguard the financial affairs of incapacitated people is riddled with problems that have drained the estates of the vulnerable and enriched politically connected lawyers and others.
Fiduciaries are people'”usually private attorneys'”whom courts appoint to assist them in a variety of ways. One of the main roles of a fiduciary is to handle the affairs of an incapacitated person, such as an elderly nursing home resident. Fiduciaries generally receive their fees from the assets of the individual the fiduciary has been assigned to represent. Under New York court rules, fiduciaries may not be related to the judge and may not take more than one appointment each year that is likely to bring them $5,000 in fees or more.
However, investigators found that these rules are widely ignored and that in some cases guardians are charging up to $400 an hour for mundane tasks. One guardian received more than $65,000 in compensation by billing his usual hourly rate as an attorney for tasks that included visiting an eyeglass store, attending a holiday party, inventorying the ward's wardrobe and sewing and ironing labels on the ward's clothing. In another case, the guardian repeatedly spent more than four hours traveling to a distant bank to deposit his ward's $50 monthly Social Security check, charging $300 for each trip.
The investigation found that many of the recipients of multiple and lucrative fiduciary appointments had connections to judges, political parties or court system personnel, raising concerns that they were selected based on factors other than merit. For example, two attorneys with high-level positions in a local political party received some 110 appointments between them in guardianship and receivership matters, and were awarded compensation of approximately $400,000.
'The Report of the Commission on Fiduciary Appointments' summarizes abuses and makes a series of recommendations for reforming the system.
"Fiduciary Appointments in New York," a report to Judge Kaye by the Inspector General, provides details of system abuses in various New York counties.
Because guardianship involves a profound loss of freedom and dignity, state laws require that guardianship be imposed only when less restrictive alternatives have been tried and proven to be ineffective. One of the best ways to avoid guardianship is to execute a durable power of attorney, which allows a person you appoint -- your "attorney-in-fact" -- to act in your place for financial purposes when and if you ever become incapacitated.
While you should seriously consider executing a durable power of attorney, if you do not have someone you trust to appoint, it may be more appropriate to have the probate court looking over the shoulder of the person who is handling your affairs through a guardianship or conservatorship. In that case, you may execute a limited durable power of attorney simply nominating the person you want to serve as your conservator or guardian. Most states require the court to respect your nomination "except for good cause or disqualification."
For more on powers of attorney, click here.