MORE ON "THE LIVING TRUST"

In its most basic terms, the promoters of the Living Trust argue that you should transfer all of your assets to the Living Trust while you are alive. You (or you and your spouse) are the trustees of the trust and manage the trust assets for your own benefit. You can change or cancel the arrangement at any time. In sum, while you are alive nothing has really changed except that your assets are technically owned by the Living Trust, rather than by you as an individual. All of the supposed benefits of the trust come into fruition when you die. The promoters state that your assets automatically pass to your beneficiaries without the delay or expense of probate. The Living Trust also claims to ensure privacy and save thousands of dollars in attorneys fees. Finally, the promoters also mention how the Living Trust will save on estate taxes. Now I attended one seminar where a question was proposed: "Will this work if I have a home in Florida too?" The promoter responded: "Yes, we will hire an attorney in Florida to transfer title to the Living Trust, for a small additional fee, and thus you can avoid probate in Florida." But according to Florida attorney Ronald A. Jones: "The problem is that Florida law provides that a revocable trust is liable for the estate debts of the decedent; and there is a 2 year statute of nonclaim. In other words, if someone dies with a revocable trust, at least theoretically the trust is on the hook for 2 years after the person dies for any debts or claims against the person who died, and if the trustee distributes, or passes out the money to the beneficiaries before the 2 years is up, and that results in the trust not having the money to pay creditors, the trustee is liable to the creditors until the 2 years is up. However, there is an exception to this: if a probate is brought, and the estate is advertised, then the period the trust is liable is limited to 3 months after the first date of the advertisement of the estate. From a practical viewpoint, it makes a great deal of sense to bring a probate, and to close out creditors claims to 3 months after the advertisement, at least if there aren't a lot of bills to pay. Otherwise, the successor trustee would be very foolish to pay the beneficiaries if the trustee might be on the hook for 2 years. So, from a practical viewpoint, most, if not nearly all, revocable trusts in Florida wind up having a probate brought in order to close out creditors claims before the 2 years are up. If a probate is going to be brought to close out creditors claims, then there is not much point to a revocable trust for the sake of avoiding probate." Thus, my recommendation is that if you do decide a "Living Trust" is for you and you have out-of-state assets, I would consult with an "out-of-state" attorney to see if the New York "Living Trust" will work with that out-of-state asset.

THE "LIVING TRUST"

Well, the Power of Attorney is obviously a tool that may or may be helpful when considering one's "estate planning" in the event of disability. Have you read all the local ads for "Living Trusts"? This is different than the "Living Will" which typically is a document that provides instructions about your wishes concerning medical treatments or life-sustaining measures if you have a terminal condition, become permanently unconscious or are in a persistent vegetative state and lack the capacity to make or communicate those decisions. A living will "speaks" for you only when you are unable to communicate your wishes concerning health-care decisions or life-sustaining measures (many of these living wills are being replaced with statutory health care proxies, an issue to be discussed later). But recently, many of you have been hearing about "living trusts". Seminars are being sponsored by attorneys in which a presentation is made, refreshments are served and free consultations are offered. Fees can even be discussed with discounts available if you act within a certain time. Since we have been exploring the new Power of Attorney, let us now explore the "living trust". They are merely an old creature called revocable trusts. Revocable trusts have become increasingly popular in estate planning. Many people believe that by creating a revocable trust, naming themselves as trustees, and transferring their assets to the trust, they will save taxes, simplify the administration of their estates, and save money for their children or other beneficiaries. Unfortunately, these beliefs are not based in fact and are typical of the myths that surround so-called "living trusts." This will be the next topic of discussion.

FINAL THOUGHTS ON POWERS OF ATTORNEY

When representing a principal, the main disadvantage of a Power of Attorney is that it is subject to abuse: although there are now new rules requiring accounting,the use of monitors, execution rules, etc., it still does not have the same ongoing court supervision of the attorney-in-fact as there is in a guardianship. If the attorney-in-fact abuses his or her authority and acts improperly, a court may step in and take action. However, in many cases, the damage is already done, and it is difficult to undo it. Of course, you should take great care in selecting your attorney-in-fact. But I also see the great divisions it creates in families wherein one member is being made attorney-in-fact unknown to other family members. My suggestion is the following: after meeting with the principal, ascertaining their wishes and before executing a Power of Attorney, counsel should notify all family members that would receive notice under the rules regarding the appointment of a guardian. A meeting should be scheduled with all in attendance wherein the principal expresses their wishes and explains why they are executing the Power of Attorney, why a particular person was selected as attorney-in-fact, why certain powers were granted, etc. Let all family members discuss it among themselves and with the principal. Afterwards, then let the principal make their decision. Does this make the process costly? Yes, but, in the long run, it is worth it. I view the Power of Attorney as I view a prospectus for securities under federal securities laws and rules: notice and disclosure is the key!

LANDLORD & TENANT COURT: FOR LANDLORDS

As I was presented this case yesterday in Landlord & Tenant Court yesterday, I forward the advice the Judge gave to the landlord who was appearing pro se. I was representing the tenant and moved to dismiss the action on the grounds the papers were improperly served. My application was granted. Without going into details, there are probably many landlords out there who are knowledgeable, etc. and may be able to handle this process by themselves...but as the Judge advised the landlord in this case, and the following is as close as I can remember to a direct quote: "You are beginning a legal rpocess here by seeking an eviction in Landlord/Tenant Court. I am a Judge, I cannot advise you. But I suggest that before you commence a legal proceeding, you get the advice of a lawyer. Process Servers are not lawyers."

WILLFUL MISSTATEMENTS WHEN COLLECTING UNEMPLOYMENT BENEFITS

A break from Powers of Attorney, as this was a case presented to me and it highlights the importance of notifying the Department of Labor of all full-time and/or part-time employment you were engaged in, on the books or not, while you are applying for a benefits. They can find out so don't hide it. Section 594 of the Unemployment Insurance Law provides that "a claimant who has willfully made a false statement or representation to obtain any benefit ... shall forfeit benefits for at least the first four but not more than the first eighty effective days following discovery of such offense ...". It further provides that the claimant shall be deemed to have received benefits for such forfeited effective days", and that "A claimant shall refund all moneys received because of such false statement ...". Not every false statement subjects a claimant to the penalties provided in sub. sec. 594. A claimant may provide information (s)he believes to be true, which ultimately proves to be incorrect. In such instances no penalty applies. However, if it is established that the claimant was aware of the true situation, but gave false information, or purposely failed to fully disclose the facts, a determination of willful misrepresentation should be made. As the courts have held, "'willful' as used here does not imply a criminal intent to defraud but means 'knowingly' , 'intentionally' , 'deliberately' to make a false statement. (Matter of Vick, 12 AD 2d 120) Thus, for example, a claimant who places "N" in the calendar insert and certifies that "I did not work in employment or self-employment although (s)he knew (s)he had worked two days and received pay is subject to the penalty for willful misrepresentation notwithstanding that the claimant honestly misinterpreted the law and believed the work had no effect on benefit rights (Matter of Vick, 12 AD 2d 120) ". The following is a link to the Department of Labor Standards for making willful misrepresentations:
http://www.labor.state.ny.us/ui/aso/A710.htm#71021

THE ESSENTIAL RULES OF THE NEW POWER OF ATTORNEY

Here are the essentials of the new Power of Attorney Law as prepared by Joan Lensky Robert, Esq:

OVERVIEW OF TERMS AND PROVISIONS
1. Benefits from governmental programs includes governmental regulations,Social Security, military, Medicare and Medicaid.
2. Sign means any mark, including electronic signature, other than if the document will be used to record real property.
3. Statutory Major Gifts Rider (SMGR) must be SIMULTANEOUSLY EXECUTED BY PRINCIPAL AT TIME OF EXECUTION OF POA AND MUST BE INITIALED TO SHOW INTENT.
4. POA is durable unless expressly not.
5. Agent must account to a Guardian if one is appointed.
6. Agent may sign after the principal becomes incapacitated.
7. POA must be in 12 point font and contain the cautionary language and Important info language to be the statutory short form poa.
8. To be valid as to an agent, the agent must also sign. If 2 agents are to act jointly, they must both sign.
9. Other POAs may be used, but they will not be considered statutory POA. However, any POA executed after September 1, 2009 must contain a SMGR to be effective for gifts.
10. Execution of POA: By principal, before a notary, as a deed is executed in NY.
11. Agent must also sign before a Notary, in the manner that a Deed is executed.
12. Statutory Major Gifts Rider (SMGR) is signed by principal before 2 witnesses & notarized
WHAT POWERS DOES THE AGENT HAVE?
13. Powers for banking, retirement, chattel, real property and insurance do NOT include the authority to change beneficiaries or add beneficiaries if there is no SMGR.
14. If agent has a joint account with principal, the agent cannot add or eliminate joint owners or totten trust beneficiaries without SMGR.
15. New accounts may be opened with POA but they may NOT be solely in the name of the agent unless the intent is to make a gift, which may occur ONLY WITH SMGR.
16. No need to explicitly state in POA which estate or trust the agent may act upon for the principal.
17. Agent may continue tradition of gifts to individuals and charities under Personal Relationships BUT ONLY UP TO $500/YEAR without SMGR. Proposed amendments to the POA statute will clarify that the $500 annual gifts is a TOTAL of such gifts aggregated, and that no gifts may be made to the agent absent the SMGR.
18. Agent cannot make health care decisions but MAY REQUEST HOSPITAL BILLS & RECORDS AS AGENT AUTHORIZED TO MAKE PAYMENTS FOR HEALTH CARE.
19. Agent may NOT designate a third party to be the agent under a health care proxy to make health care decisions.
20. Agent may establish intervivos trust and may revoke the trust so long as that power is given in the SMGR.
HAVING THE POA HONORED
21. No third party shall refuse to honor a POA without good cause. Good cause would be the agent’s failure to provide an original or atty or court certified copy of POA, or the third party’s knowledge that there has been a referral to Adult Protective Services, or ACTUAL knowledge that principal is deceased, or incapacitated when POA is not durable.
22. Third party cannot refuse to honor POA by requiring its own form OR because time has elapsed since the document was executed OR because time lapsed between the principal’s executing the POA and the agent’s executing the POA.
23. REVOCATION OF POA: Given to financial institution at the office where accounts are located.
24. Third party may require Affidavit that POA is in full force and effect.
WHAT MUST THE AGENT KNOW ABOUT HIS/HER RESPONSIBILITIES?
25. Fiduciary duties and standard of care that agent owes to principal are set forth:
A. Must act in best interest of principal
B. No commingling of assets
C. Must keep records and be able to present them WITHIN 15 DAYS to a monitor, if appointed, or to the principal or to a coagent or successor agent or to Adult Protective Services or to a Court Evaluator, or GAL or Guardian or Conservator or to the Personal Representative of the estate of the deceased Principal.
D. Agent may be liable for breaches of fiduciary duty if proceeding is brought to compel the agent to provide records.
E. When agent engages in transaction, s/he is acknowledging that Principal is alive, and that agent has authority to engage in this transaction and has no knowledge that POA has been revoked.
26. Agent may RESIGN by giving notice to principal, successor agent, the monitor or guardian. If principal is incapacitated, agent may petition court to resign.
27. Principal may PROVIDE FOR ALTERNATE METHODS OF RESIGNATION in the POA.
28. Agent may be paid for services SO LONG AS POA SO PROVIDES.
29. Agent shall sign: AGENT as agent for PRINCIPAL or PRINCIPAL by Agent.
POTPOURRI OF PROVISIONS:
30. Principal may appoint a monitor to receive financial documents. Monitor does NOT have fiduciary duty.
31. N.Y. GOL 51510:
A special proceeding may be commenced by someone who is authorized to request records but has not received them OR to determine whether POA is valid or if Agent should receive compensation, or to remove the agent or to construe provisions of the POA or to compel a third party to honor the POA
32. POA terminates upon death of principal or its revocation.
33. Agent may no longer act if principal revokes agent’s authority or is spouse of
principal and they become divorced.
34. Principal may request information on his/her finances from agent at any time.
35. When 2 agents are appointed, it is presumed that they may act separately unless the POA is initialed ( ) My agents may act separately.
36. This POA revokes prior POAs unless it indicates that it does not.
37. If the agent is to receive compensation, the Principal must check ( )My agent shall be entitled to reasonable compensation for services rendered.
REVOCATION OF POA:
38. Written, signed and dated revocation must be delivered by the principal to the agent and to any third party that principal believes has received POA or acted upon POA.
39. If POA has been recorded, the revocation must be recorded.
40. Third party must have ACTUAL notice of revocation – recording the revocation is not actual notice to a third party.
41. Agent MUST HONOR the revocation unless the Principal is subject to a guardianship under Article 81 of the Mental Hygiene Law.
MODIFICATIONS
42. Additional provisions may be included, such as how an agent may resign.
43. If this POA is not intended to revoke prior POAs this must be indicated here.
44. Powers such as the power to waive or exercise an elective share or represent the principal’s interests in educational decisions or to express the intent to return home, often used in Elder Law planning, may be granted here.
45. The method of compensation to the attorney in fact may be indicated here.
STATUTORY MAJOR GIFTS RIDER (SMGR)
46. Must be of 12 point font
47. Principal’s signature must be NOTARIZED AND WITNESSED BY 2 WITNESSES, NEITHER OF WHOM IS A PERMISSIBLE DONEE.
48. Standard power: annual exclusion gifts to spouses, children, more remote descendants and parents (or twice that amount if the spouse will split gifts for gift tax purposes).
49. Additional power: A SPECIFIC AGENT is authorized to make the ABOVE GIFTS to him/herself.
50. If gifting above the annual exclusion amount is authorized, that must be specified. The purpose should also be specified (i.e., elder law planning, tax
planning). EX: UNLIMITED GIFT GIVING TO ALL OF MY CHILDREN, INCLUDING TO MY AGENT, ____, in order to effectuate an asset preservation plan. HOWEVER, ANY GIFTS MADE TO MY CHILDREN SHALL BE IN EQUAL SHARES… PROVIDED THAT GIFTS FOR THE BENEFIT OF MY CHILD…. SHALL BE PAID OVER TO A SUPPLEMENTAL NEEDS TRUST THAT I AUTHORIZE MY AGENT TO ESTABLISH FROM MY FUNDS.
EFFECTIVE DATE
51. September 1, 2009 for the repeal of the prior Statutory Short Form Power of Attorney
52. POAs executed properly prior to September 1, 2009 are still valid.
53. Nonstatutory POAs executed AFTER September 1, 2009 MUST STILL HAVE A SIMULATANEOUS SMGR to authorize giftgiving by the agent, and NOT ONLY GIFT GIVING TO HIM/HERSELF, BUT ANY GIFTGIVING.
54. The FIDUCIARY DUTIES are effective for POAS executed prior to September 1, 2009
55. The special proceeding may be initiated to clarify the validity of the document for POAs executed prior to September 1, 2009

MORE PROTECTION IN POWERS OF ATTORNEYS?

The obligations of an agent under a Power of Attorney include record keeping, the obligation to account and to act in the best interest of the principal. Also under the new rules, the principal may appoint a monitor to receive copies of financial records. NY G.O.L. 5-1509. The agent must submit copies of records to a monitor as well as to a co agent,court evaluator, Guardian, the representative of the principal’s estate and certain government agencies, such as investigative agencies and law enforcement officials. NY G.O.L. 5-1510. Perhaps if the monitor was completely separate from the principal, there could be more protection to the assets of the principal. But the costs of such record keeping and accounting may be considerable and the Power of Attorney was designed to replace the expensive process of Guardianship. So which is the better route?

THE SMGR OF THE POWER OF ATTORNEY

Under the new rules, and in response to the potential abuse inherent in the Power of Attorney, under the new rules, if the principal wishes to delegate to the agent the authority to make gifts, they must first initial this intent on the Power of Attorney form itself AND ALSO EXECUTE A SEPARATE STATUTORY MAJOR GIFTS RIDER (SMGR), which must be signed by the principal before a notary AND WITNESSED BY TWO WITNESSES, NEITHER OF WHOM IS A POSSIBLE RECIPIENT OF THE GIFTS. “Major gifts” are those in excess of $500/year and which do not continue the custom of the principal. NY G.O.L. 5-1514. Powers such as the authority to create, amend, revoke or terminate an intervivos trust, create joint accounts, modify “totten trust” beneficiaries and change beneficiaries on insurance or retirement accounts must now be included in the SMGR, as they are no longer encompassed within the powers accorded “insurance” or “retirement accounts”. See also NY G.O.L. 5-1501L. But does this truly prevent the abuse of a Power of Attorney?

THE THREE FORMS OF POWERS OF ATTORNEYS

There are three forms of Powers of Attorney, viz., "Nondurable," "Durable," and "Springing" Powers of Attorney. A "Nondurable" Power of Attorney takes effect immediately. It remains in effect until it's revoked by the principal, or until the principal becomes mentally incompetent or dies. It is often used for a specific transaction, like the closing on the sale of a residence, or the handling of the principal's financial affairs while the principal is traveling outside the country. A "Durable" Power of Attorney enables the agent to act for the principal even after the principal is not mentally competent or physically able to make decisions. The "Durable" Power of Attorney may be used immediately, and is effective until it is revoked by the principal, or until the principal's death. A "Springing" Power of Attorney becomes effective at a future time. That is, it "springs up" upon the happening of a specific event chosen by the principal, and spelled out in the Power of Attorney. Often that "springing" event is the illness or disability of the principal. It will frequently provide that the principal's physician will determine whether the principal is competent to handle his or her financial affairs. A "Springing" Power of Attorney remains in effect until the principal's death, or until revoked by a court. Now under the new law, there is a “springing event” to all Powers of Attorney as the date on which an agent's signature is acknowledged is the effective date of the Power of Attorney as to that agent; if two or more agents are designated to act together, the power of attorney takes effect when all the agents so designated have signed the power of attorney with their signatures acknowledged. NY G.O.L. § 5-1501B subd. 3 (a). Of course, if the Power of Attorney is a “Springing Power of Attorney (“to take effect upon the occurrence of a date or contingency”), the occurrence of the contingency is also required. NY G.O.L. § 5-1501B subd. 3 (b). Both "Durable" and "Springing" Powers of Attorney are frequently used to plan for a principal's future incapacity or disability and loss of competence resulting, for example, from Alzheimer's Disease or a catastrophic accident. And by appointing an agent under a "Durable" or "Springing" Power of Attorney, the principal is setting up a procedure for the management of his or her financial affairs in the event of incompetency or disability. Which is better for the principal?

IMPORTANT FOR ATTORNEYS

I am taking a break from our discussion of Power of Attorney to discuss an issue in which attorneys fell themselves powerless.I am a member of the Lawyers Assistance Program of the Nassau County Bar Association which provides confidential assistance to all attorneys, judges and law school students who are struggling with alcohol, drug and/or mental health problems or are affected by the problem of substance abuse, stress, or depression. Here is an article from the New York Law Journal which was forwarded to me by a fellow committee member entitled "Employment Woes Fuel Uptick in Lawyer Depression" by Vesselin Mitev which appeared on July 20, 2009:

The attorneys who attended a recent weekly support group in Manhattan were from different backgrounds and at varying stages of their careers, but one thing they all shared was a growing nervousness over the stagnant job market. Depression increasingly has been recognized as a major problem among attorneys, members of a high-stress occupation vulnerable to anxiety even in good times. And these are not good times. "There is anxiety and depression over being underemployed or unemployed, or marital difficulties if they lost their job and the question is, how do they handle the anxiety," said Eileen Travis, who heads the New York City Bar's Lawyer Assistance Program. More lawyers are calling the program and a greater number have been suffering from depression that stems, at least partly, from the decline in their personal and professional prospects brought on by the economic downturn. The organization this month started a support group, where for an hour each week for six weeks, lawyers can commiserate and share stories about their struggles. Thirty-one people signed up for the first session, led by Sylvan Schaffer, a licensed psychologist who also is an attorney. "I was getting quite a few calls from people that were depressed, burned out," Schaffer...said in an interview. Since many attorneys are "kind of embarrassed" about traditional psychotherapy, he said, the group meetings are an attempt to encourage frank discussion. "A lot of them say the same type of things -- people don't respond to resume solicitations, not even a call back," Schaffer said. "There's a sense of desperation." The support group has two main focuses, according to Schaffer: helping attorneys stay positive by sharing their stories and hearing encouragement from other members and coming up with creative job-hunting methods. One attorney, a corporate lawyer, was concerned that taking a job offer in litigation would derail his career. After discussion, the consensus was that in this job market, practicing in a different field is better than a blank spot on the resume, Schaffer said. "Attorneys really don't get sympathy. People assume that attorneys are rich and have jobs," Schaffer said, adding that he knows of lawyers who are reluctant to apply for unemployment benefits because of the "stigma that [doing] that really makes me unemployed." Other bar associations with lawyer assistance programs -- there are 17 run by county associations in New York as well as the New York State Bar Association for the rest of the state -- agree that attorneys confronting personal problems may be reluctant to seek help. "It takes a while for people to screw up the courage to call us," said John Crowe, the director of the Monroe County program. Patricia Spataro, who heads the state bar's lawyer assistance program, said that after a short spike of depression-related calls beginning in October 2008, the volume had dropped back to around six per month. "My theory is that the lawyers who have been profoundly impacted by the economy are struggling to right themselves and survive, and they are not paying too much attention to their increased stress level, depression, increased drinking," Spataro said in an e-mail interview. "Perhaps we might see these calls when the dust settles and the psychological effects are felt in full force." In addition to substance abuse, a lack of job prospects can trigger the onset of depression, which in extreme cases may even lead to suicide. The subject is familiar to Andrew Sparkler, an attorney whose close friend and Fordham University School of Law classmate, Dave Nee, took his own life in June 2005. "We were studying for the bar and Dave had had these long absences the previous semester, which in hindsight may or may not have been calls for help, and then he didn't show up for a day or two and at the time we didn't think it was a big deal. When we found out it was really just mind blowing, a uniquely terrible experience," Sparkler, a Manhattan lawyer with the American Society of Composers, Authors, and Publishers, said in an interview. Nee's death at 29 prompted Sparkler and some mutual law school friends to start The Dave Nee Foundation, a nonprofit organization that aims to support efforts at curbing suicide among adolescents and young adults. According to Sparkler, law students and lawyers, who tend to be competitive and unaccustomed to seeking assistance, often ably mask symptoms of depression. "If someone is the stereotypical lawyer, they are motivated and intelligent and proud and these are traits that ... don't always allow a person to acknowledge that they need help," he said. The current economic environment applies even more pressure to law students looking to get jobs, Sparkler said, especially given the method of grading most prevalent in law school today. "The exams determine [class] standing -- there is a forced curve and the pressure to get a job in this environment is ratcheted up even more," he said. This fall, board members of the foundation, including Sparkler, will meet with Fordham Law students in small groups to discuss ways to deal with stress, anxiety and uncertainty, all factors that could lead to depression. The project, called "Uncommon Counsel," will also distribute brochures with statistics and treatment information to faculty and students as well as update the school's Web site with similar details. The goal is to make students "realize that the law school has the resources available and just to take care of your friends and know where you can get anonymous counseling," said Sparkler. "You don't have to feel like you are the only person going through this in law school." William M. Treanor, the dean of Fordham Law, said that depression is a "very important issue" that often gets swept to the side. "It's a real concern and a problem in the legal profession," he said. "Studies indicate that it is common among law students and common among lawyers. Given that, it's important to try and figure out ways to combat it and to let people know if they are suffering, they are not alone." Getting the message out about depression is one of the main goals of Daniel Lukasik...who has suffered from depression since turning 40 seven years ago. Lukasik runs a Web site about lawyer depression, www.lawyerswithdepression.com, and is working on a documentary on lawyers and depression that he hopes to distribute to the 15 law schools in the state. The film, funded by state and Erie County bar association money, will feature Lukasik and other lawyers talking about their experiences with depression. "I don't want people to go through what I went through," Lukasik, who will speak to Syracuse University College of Law students at a seminar this fall about depression, said. "When I speak to these young people and say, 'This could be one of your brethren,' I [hope] it carries a lot of weight." Lukasik pointed out that traits generally associated with susceptibility to depression -- neurotic and individualistic tendencies -- are typically considered positive attributes in the legal field. "Being pessimistic is generally rewarded in the law," he said. But if that pessimism carries over to a lawyer's personal life, he said, it may become a catalyst to depression, when coupled with other stress-inducing events, like financial problems. "Financial stressors are triggers, so with the insecurity of not having a job...these [become] very loaded issues," he said.

The Nassau County Bar Association Lawyers Assistance Program operates a 24-hour confidential hotline: 1 888 - 408-6222.

POWER OF ATTORNEY AND GUARDIANSHIP

Under the new Power of Attorney Law, not only must the agent account to the principal, but, as set forth in NY G.O.L. 5-1501A, if a guardian is later appointed, the agent shall account to the guardian rather than to the principal. This I find interesting because most attorneys will recommend making a Power of Attorney in order to make guardianship proceedings unnecessary arguing that a Power of Attorney is much less expensive and much less stressful than the court-appointed guardian process. Article 81 of New York’s Mental Hygiene Law authorizes a court to appoint a guardian to manage the personal and/or financial affairs of a person who cannot manage for himself or herself because of incapacity and not all Article 81 guardians in New York have the same powers. Guardianship orders are specifically tailored so that the powers that are granted to the guardian are those that are specifically necessary to meet the needs of the person who is incapacitated. For example, a person may not be able to pay their bills or manage their money, but may have the ability to make healthcare decisions. In such a case, a court might appoint a guardian with powers that are limited to financial management. So this raises a question: what is best for the principal? To execute a broad Power of Attorney while they have the capacity or have a guardian appointed when necessary?

THE POWER OF A POWER OF ATTORNEY

One of the principal provisions of the new law regarding Powers of Attorney is that it is durable, i.e., not affected by the subsequent incapacity of the principal unless the document so states. NY G.O.L. 5-1501A. What I have seen many times is a Power of Attorney executed while the principal is incapacitated. For example, I was presented with a situation where a client discovered that a wealthy relative, who had previously made the client a primary beneficiary of the wealthy relative's estate, had executed a Power of Attorney to other relatives who were not named in the will. The wealthy relative was suffering from dementia and was attended to on a 24 hour basis. Of course, the other relatives who were not named in the will and who now had a Power of Attorney changed the will, established trusts for their benefits, etc. Another situation I was faced with was a client, who was living with a significant other who had a terminal disease, discovered that the significant other was basically no longer competent and wanted to get a Power of Attorney from the significant other to settle affairs. These situations illustrate a very important ethical question regarding the Power of Attorney - who does the attorney represent? The principal or the agent? And if the attorney, as I believe, should and must be the attorney for the principal and not the agent, should the attorney meet the proposed agent prior to the execution of the document and explain to him/her the obligations of a fiduciary under the new law, or is separate counsel needed? Remember: the Power of Attorney is a powerful too.

ANOTHER EXAMPLE OF ABUSE OF POWER OF ATTORNEY

In Estate of Frances E. Francis, File No. 4332003, (Surr. Ct. West. Co. March 5, 2008), a 98 year old woman executed a Power of Attorney prepared by her tenant, a nonattorney,in which he appointed himself as the agent. and included enhanced powers in the document, such as the ability to make gifts to the attorney in fact and to add any names, including his family members, to her accounts. The document specifically dispensed with any requirement that he account during Ms. Francis’s lifetime or after her death for his acts as such agent, and removed any liability for his acts as agent during Mrs. Francis’s lifetime or after her death. The agent claimed that he had obtained the form on the internet and had read a book which helped him add the powers that he included. The day after the Power of Attorney was executed, the agent removed an old power of attorney from banks, added himself and his mother to Ms. Francis’s accounts and a few months later executed a lifetime tenancy agreement in which he and his mother were granted lifetime tenancy, joint with right of survivorship, in Ms. Francis’s home, while she retained the right to reside in the home and pay the bills. The agreement allowed the agent and his mother to remain even if they did not pay rent. When Ms. Francis died at age 100, her nephew, the sole distributee, brought an action in Surrogate’s Court for an accounting and to set aside the transfers of assets. The nephew also attached a copy of a 1987 Will that had named him as the sole heir. The agent objected to discovery proceedings and claimed that the statute of limitations had passed for his actions. He also claimed that the Power of Attorney exonerated him from any acts as well as the need to account. The court held that the statute of limitations was 6 years, sounding in breach of fiduciary duty, and that the breach of duty started when he refused to file an accounting of his proceedings as attorney in fact. The court further held that any provisions which exonerate an agent under a Power of Attorney from any and all actions run afoul of public policy and of the requirements of GOL 51503. The court granted a summary judgment to the nephew and set aside all transfers and the tenancy agreement. The court also held that a Power of Attorney cannot eliminate the agent’s obligation to account, as that is fundamental to the fiduciary relationship. The decision found that no actions of the agent could be deemed to be in the best interests of Ms. Francis, and hence the actions were void against public policy.

EXAMPLES OF ABUSE OF POWER OF ATTORNEY

The potential for fraud exists in every power of attorney arrangement, through self dealing, embezzlement, and unlawful gifting. In some situations, a power of attorney holder will significantly deplete an estate, leaving the heirs of the principal with little or no inheritance. Other ways in which a power of attorney can be abused include changing beneficiary designations on life insurance or annuities, and opening bank accounts with joint title or pay on death provisions in favor of the agent. The potential for power of attorney disputes is large and can lead to lawsuits. In many situations, the power of attorney abuse is part of a broader pattern of elder abuse. If the principal has passed away by the time the power of attorney abuse has been discovered, the principal's estate or the intended beneficiaries of the property may, in New York, be able to sue the agent for breach of fiduciary duty. For example in Matter of Ferrara, 3 NY3d 244 (2006), the Court of Appeals determined that additional powers added to a statutory form, in particular the power to make gifts to an agent, must be exercised in the best interest of the principal. In Ferrara, an attorney who represented the agent, not the principal, prepared a Power of Attorney for the agent’s uncle without having met the uncle. The authority to make unlimited gifts to the nephew agent was included as an additional power to the statutory powers. The document was executed before an attorney/notary who had not previously met the uncle and who testified that she had acted only as a notary and had not explained the provisions of the Power of Attorney to him. The nephew then made gifts of approximately $800,000 to himself, in conflict with his uncle’s previous Will. When the charities named in the original Will sued to recover funds from the nephew, the lower courts upheld the gifts, as there was no evidence that the uncle had not properly executed the Power of Attorney. The Court of Appeals, however, reversed, stating that all powers must be exercised in the best interest of the principal, and that there was no possible benefit to the principal from the nephew’s actions.

MORE ON POWERS OF ATTORNEYS

Before we discuss the new Power of Attorney rules which begin on September 1 of this year, let us discuss the general rules of what a Power of Attorney is. A Power of Attorney is an agreement between two parties: a principal and an attorney in fact. The attorney in fact need not be an attorney at law (a lawyer). A Power of Attorney gives the attorney in fact rights to act in the principal's place. They are, in effect, fiduciaries of their principals. Powers of Attorney may be general, limited, or special. They are usually written documents, and New York imposes special requirements on their form or substance. General Powers of Attorney allow agents to take any legal action their principals may take. For example, the agent could open or close bank accounts in the principal's name, invoke or waive the principal's contractual rights, or buy or sell stocks for the principal. In New York, even a general Power of Attorney is not unlimited due to statute or court precedent. A principal may grant a limited Power of Attorney by placing restrictions in the Power of Attorney. New York also allows special Powers of Attorney for certain situations. Most often, special Powers of Attorney are used to appoint people to make medical decisions on the principal's behalf when the principal is incapacitated - a health care proxy. New York also has the Standby Guardian Designation, discussed in an earlier blog. Normally, a Power of Attorney only remains effective as long as the principal is alive and competent to make decisions. Principals may, however, grant durable Powers of Attorney that persist after they are no longer able to make their own decisions.

CRIMINAL RIGHTS - IMPORTANT NOTICE - NASSAU COUNTY

A notice appeared yesterday to all persons arrested for misdemeanor and non-criminal offenses in Nassau County who thereafter were strip searched upon entry to Nassau County Correctional Center, from May 20, 1996 to June 1, 1999. There is a class action in the United States District Court, Eastern District of New York entitled In Re Nassau County Strip Search Cases, Civ 99-3126, 2844, 4238 (DRH). In a nutshell, in 1999, the District Court for the Eastern District of New York held that Nassau County's blanket policy of strip searching newly admitted, misdemeanor detainees violated clearly established Fourth Amendment law. See Shain v. Ellison, 53 F.Supp.2d 564 (E.D.N.Y.1999), aff'd, 273 F.3d 56 (2d Cir.2001). Although the policy has never been formally enjoined, Shain v. Ellison, 356 F.3d 211 (2d Cir.2004) (vacating injunction for lack of standing), Nassau County officials assert that following the District Court's 1999 decision, they ceased implementing it. Shortly after the District Court's 1999 decision, plaintiffs brought three separate actions in the Eastern District of New York. Together, plaintiffs named as defendants Nassau County, Sheriff Joseph P. Jablonsky, the Sheriff's Department, County Executive Thomas S. Gulotta, the Division of Corrections, the Port Washington Police District and its chief of police, William Kilfoil, and up to 200 subordinate John and Jane Doe corrections officers. The case is now certified as a class action and defendants have conceded liability to the class members. If you are a member of the class, you have until August 15 to be excluded and if you have any questions, contact the class administrator at 1 877 933-1295

THE NEW POWER OF ATTORNEY RULES

On September 1, 2009, a new statutory Power of Attorney will be in effect. NY G.O.L. 51501, Chap. 644 of Laws of 2008. This new statutory form changes the manner of execution and the content of the previous statutory form. It continues the dual use of a Power of Attorney: financial access to a principal’s accounts while he or she has capacity as well as an effective tool for future planning if the principal becomes incapacitated. By setting forth the fiduciary duty of the agent to the principal, the new statutory form is intended to eliminate abuses committed by agents under the previous statutory Powers of Attorney and includes provisions intended to safeguard individuals from those who overreach via Power of Attorney. Even if the extensive provisions in the form do not stop the unauthorized use of funds, the statute is clear that agents must keep records and document their transactions. This requirement may prove a deterrent to those who wish to serve only for their own self interest. I just attended a seminar on this and will discuss more - and realize that Power of Attorneys executed prior to September 1 will still be effective but the fiduciary duties will now apply to them as well as the special proceeding that may be initiated to clarify the validity of the document executed prior to September 1, 2009

THE DOMESTIC ASSET PROTECTION TRUST

The Domestic Asset Protection Trust (DAPT) is variously known as an Alaska Trust, Delaware Trust, or Nevada Trust, since those states have been in the lead in authoring rather blatantly anti-creditor legislation that allows self-settled spendthrift trusts. I recently read an article (date unknown) about how it is an effective tool to protect your assets from creditors. Bottom line: it isn't. The 2005 changes to the Bankruptcy Code have created a new 10-year limitations period for transfers to self-settled trusts which are meant to hinder, delay or defraud creditors. This effectively means that all transfers to domestic asset protection trusts will be suspect for the 10 years prior to the date that a bankruptcy petition is filed. Because of this, domestic asset protection trusts should not be considered for asset protection planning and, indeed, in most circumstances it might be malpractice per se for an advisor to form a DAPT for his client if asset protection is a concern.This 10-year clawback by itself should be enough to keep people for using DAPTs for asset protection. Of course, this isn't going to stop the trust companies from marketing them. Moreover, if you are a New York resident, and but is not in bankruptcy and you are still considering using one of these out of state trusts, read my July 10 blog.

RENTING OUT APARTMENTS IN NASSAU COUNTY

As we now know all too well, many Americans are struggling to make their mortgage payments, while others are in desperate need of affordable housing. Enter the so-called mother-in-law apartment, which can fix both issues: Homeowners can fetch extra cash and in the process provide decent, below-market rentals. But can you convert your basement to an apartment? Each town has it's own code but many are similar to the Town of Hempstead's which only permit a single family home to be converted to a two family home under the following conditions: a) a permit is issued and plans approved and b) the second unit is used by a parent, child or sibling of the homeowner or the owner of the house is a senior citizen and obtains a special two-family senior citizen residence permit. If you don't follow the rules of your town, etc., it is an illegal apartment. Besides the danger of being fined by your local building department and the inability to collect rent in a non-payment proceeding (you cannot sue in court for rent of an illegal apartment), your insurance policy may be in danger (certainly an issue when people are injured on your property, there is a fire, etc.) as the insurer may disclaim coverage and your mortgage company may claim a default. In a recent landlord and tenant case, I spoke to the Town of Hempstead Building Department and they stated that under no circumstances, will they grant a permit for a basement apartment. You should note that the rules appear to permit the letting by a family of one (1) or more rooms to not more than two (2) boarders, roomers or lodgers, provided, however, that every room in such apartment shall have free and unobstructed access to each required exit. The applicable statute in the Town of Hempstead is Chapter 88: HOUSING AND REHABILITATION CODE.

MORE ON UMEPLOYMENT INSURANCE BENEFITS

He is a common issue I am getting from clients who are fighting to obtain unemployment benefits: were they fired or did they leave voluntarily? This can be a murky issue especially when an employee and the employer have a meeting where they both agree, for whatever reason, that it would be best if employment was terminated. According to the NYS Department of Labor: "You must meet the conditions set by law to receive unemployment insurance...You will be disqualified from receiving unemployment insurance if: You quit a job without good cause; or You quit a job due to marriage;...and You have not subsequently worked and earned five times your benefit rate. A disqualification for the above reasons lasts until you work and earn at least five times your benefit rate. You must be out of work again through no fault of your own."

FREE MORTGAGE FORECLOSURE CLINIC JULY 14 - NASSAU COUNTY

This is from the Nassau County Bar Association: Nassau residents caught in the growing mortgage foreclosure crisis can have their questions answered by attorneys at a free clinic sponsored by the Nassau County Bar Association on July 14, 4-6 p.m. at the NCBA headquarters, 15th and West Streets, Mineola, NY. Attorneys have volunteered to provide one-on-one guidance, advice and direction to any Nassau County homeowner who is concerned about foreclosure matters or is already in the foreclosure process involving property in Nassau County. “Attorneys have volunteered to review individual foreclosure issues with Nassau homeowners, help them sort things out, and give advice or refer them to agencies and programs, right in the same room, that may be able to help. This is not legal representation,” cautioned NCBA President Peter Levy. “We will help the homeowner find out if indeed, they need a credit counselor or a lawyer, and get them in touch with available resources.” In addition to meeting one-on-one with a volunteer attorney, housing counselors from the Nassau County Homeownership Center and representatives from Nassau/Suffolk Law Services -- which provides free legal services for those who meet certain income guidelines -- will be on hand to provide assistance. Reservations are required by calling the Bar Association at 516-747-4070 between 9:30 a.m. - 4:30 p.m.

ENFORCMENT OF JUDGMENTS IN NEW YORK - NEW DEVELOPMENT

If you receive a judgment against you in New York, of course your assets located in New York may be subject to attachment, subject to the exemptions contained in CPLR article 52. But what about your assets that are located outside of New York - lets say in Florida? Normally, the judgment creditor would have to hire a Florida attorney, convert the New York judgment to a Florida judgment, and then go after the Florida asset. But on June 4, 2009, in Koehler v. Bank of Bermuda, 2009 NY Slip Op 4297 (June 4, 2009), the New York Court of Appeals held that “a court sitting in New York may order a bank over which it has personal jurisdiction to deliver stock certificates owned by a judgment debtor (or cash equivalent to their value) to a judgment creditor, pursuant to CPLR article 52, when those stock certificates are located outside of New York.” Thus, unless reversed, at least banks that are subject to personal jurisdiction in New York may be compelled to bring to New York and turn over assets from anywhere in the world belonging to any of their depositors who become judgment debtors. And other lower courts may hold that, pursuant to that decision, any non-New York organization or individual subject to personal jurisdiction in New York (you don't have to be in New York to be subject to New York jurisdiction as we have "long arm jurisdiction" to be discussed later) may be compelled to turn assets belonging to New York judgment debtors.

MORE ON GARNISHMENT

Again, always consult a lawyer and have that lawyer review CPLR 5205 when you are faced with a judgment creditor. But here are some "amusing" exemptions from application to the satisfaction of money judgments as contained in the statute in CPLR 5205 (a) (I have emphasized the exception to the exemptions): "The following personal property when owned by any person is exempt from application to the satisfaction of a money judgment except where the judgment is for the purchase price of the exempt property or was recovered by a domestic, laboring person or mechanic for work performed by that person in such capacity: 1. all stoves kept for use in the judgment debtor's dwelling house and necessary fuel therefor for sixty days; one sewing machine with its appurtenances; 2. the family bible, family pictures, and school books used by the judgment debtor or in the family; and other books, not exceeding fifty dollars in value, kept and used as part of the family or judgment debtor's library; 3. a seat or pew occupied by the judgment debtor or the family in a place of public worship; 4. domestic animals with the necessary food for those animals for sixty days, provided that the total value of such animals and food does not exceed four hundred fifty dollars; all necessary food actually provided for the use of the judgment debtor or his family for sixty days; 5. all wearing apparel, household furniture, one mechanical, gas or electric refrigerator, one radio receiver, one television set, crockery, tableware and cooking utensils necessary for the judgment debtor and the family; 6. a wedding ring; a watch not exceeding thirty-five dollars in value; and 7. necessary working tools and implements, including those of a mechanic, farm machinery, team, professional instruments, furniture and library, not exceeding six hundred dollars in value, together with the necessary food for the team for sixty days, provided, however, that the articles specified in this paragraph are necessary to the carrying on of the judgment debtor's profession or calling."

GARNISHMENT OF SOCIAL SECURIRY BENEFITS AND OTHER BENEFITS

Recently, I was asked the following: a client had a money judgment against them. The client's bank had contacted them and stated that it had just received an information subpoena from the judgement creditor asking if they had any funds. The question was: Would the client lose the funds as this account was only used to receive direct deposits of a social security benefit. The answer was in CPLR 5205. New York CPLR 5205 generally exempts for garnishment social security benefits. The judgment-creditor will have to look elsewhere to satisfy the judgment. Here is the pertinent provision: CPLR 5205 (l) Exemption of banking institution accounts into which statutorily exempt payments are made electronically or by direct deposit. 1. If direct deposit or electronic payments reasonably identifiable as statutorily exempt payments were made to the judgment debtor's account in any banking institution during the forty-five day period preceding the date a restraining notice was served on the banking institution or an execution was served upon the banking institution by a marshal or sheriff, then two thousand five hundred dollars in the judgment debtor's account is exempt from application to the satisfaction of a money judgment. Nothing in this subdivision shall be construed to limit a creditor's rights under 42 U.S.C. § 659 or 38 U.S.C. § 5301 or to enforce a child support, spousal support, alimony or maintenance obligation. Nothing in this subdivision shall alter the exempt status of funds that are protected from execution, levy, attachment, garnishment or other legal process, pursuant to this section or under any other provision of state or federal law, or shall affect the right of a judgment debtor to claim such exemption. 2. For purposes of this article, "statutorily exempt payments" means any personal property exempt from application to the satisfaction of a money judgment under any provision of state or federal law. Such term shall include, but not be limited to, payments from any of the following sources: social security, including retirement, survivors' and disability benefits, supplemental security income or child support payments; veterans administration benefits; public assistance; workers' compensation; unemployment insurance; public or private pensions; railroad retirement; and black lung benefits. 3. (i) Beginning on April first, two thousand twelve, and at each three-year interval ending on April first thereafter, the dollar amount of the exemption provided in this section, subdivisions (e) and (h) of section fifty-two hundred twenty-two, subdivision (a) of section fifty-two hundred thirty and subdivision (e) of section fifty-two hundred thirty-two of this article in effect immediately before that
date shall be adjusted as provided in subparagraph (ii) of this paragraph.

Other assets are protected under the statute and will be discussed later but again, always consult a lawyer and have that lawyer review the full statute when you are faced with a judgment creditor.

CLIENT CONFIDENTIALITY

I am reposting an article from the American Bar Associatiion website as it is relevant to a situation I had earlier in two matrimonial cases where the client and/or the spouse had engaged in criminal activities and, if I had proceeded, would have required the retention of another attorney to consult on the effect of these issues. Here is the article:

"Client confidentiality: Lawyer to lawyer consultations
By Peter Geraghty, Director, ETHICSearch

You represent a client in a divorce matter. You have come across a tricky tax question that you do not feel comfortable handling on your own. You would like to run it by a lawyer that you know who has a concentration in tax matters, but who is not a member of your firm. You do not intend to retain this lawyer as co-counsel.

What are the ethical considerations you should keep in mind if you decide to proceed with this consultation?

ABA Formal Opinion 98-411 Ethical Issues in Lawyer-to-Lawyer Consultation provides guidance in this area. The opinion begins by setting the stage for when such consultations typically take place:

…The decision to seek another lawyer's advice may be precipitated by an atypical fact pattern, a knotty problem, a novel issue, or a matter that requires specialized knowledge. A lawyer who practices alone, or who has no colleague in or associated with his firm with the necessary competence will, and indeed often must, seek assistance from a lawyer outside the firm. Even the most experienced lawyers sometimes will find it useful to consult others who practice in the same area to get the benefit of their expertise on a difficult or unusual problem.

The consulting lawyer

The opinion noted that the consulting lawyer must be careful to avoid revealing confidential information during the consultation, but that Rule 1.6 Confidentiality of Information permits disclosure if the consulting lawyer reasonably believes that the consultation will benefit the client. The Committee stated:

…We interpret Rule 1.6(a), as illuminated by Comment [7], to allow disclosure of client information [FN5] to lawyers outside the firm when the consulting lawyer reasonably believes the disclosure will further the representation by obtaining the consulted lawyer's experience or expertise for the benefit of the consulting lawyer's client. However, the consulting lawyer's implied authority to disclose client information in consultation is limited, as our further discussion reflects.

Note: the substance of paragraph 7 of the Comment to Rule 1.6 has been moved to paragraph 5 pursuant to the ABA Ethics 2000 Commission’s (E2K) recommendations. Paragraph 5 of the Comment to the current version of Rule 1.6 states:


[5] Except to the extent that the client's instructions or special circumstances limit that authority, a lawyer is impliedly authorized to make disclosures about a client when appropriate in carrying out the representation. In some situations, for example, a lawyer may be impliedly authorized to admit a fact that cannot properly be disputed or to make a disclosure that facilitates a satisfactory conclusion to a matter. Lawyers in a firm may, in the course of the firm's practice, disclose to each other information relating to a client of the firm, unless the client has instructed that particular information be confined to specified lawyers.

Even though certain disclosures may be impliedly authorized, the Committee stated that the consulting lawyer should still take steps to avoid revealing client confidences, such as, for example, by making inquiries on general topics, or by making the consultation in the hypothetical. In this way, the lawyer would not violate Rule 1.6 if he discloses no information identifiable to the client. The opinion cautions however that the consulting lawyer must be aware that merely putting the inquiry in the hypothetical does not avoid all risk of disclosure, since the consulted lawyer may be able to subsequently identify the client based on the fact pattern.

If the lawyer determines that the consultation would require the disclosure of client confidences or of information that is protected by the attorney-client privilege and would be harmful to the client if disclosed, the lawyer should get the client’s informed consent before proceeding with the consultation. The Committee stated that the consequences of disclosure can be severe, and can include the potential waiver of the attorney-client privilege. Furthermore, depending on the circumstances, in the absence of an agreement to the contrary, the consulted lawyer may not have an obligation to preserve the consulting lawyer’s client information, and may also not be prohibited from representing a client who has interests adverse to those of the consulting lawyer’s client. Under such circumstances, the Committee suggested that the consulting lawyer get the consulted lawyer’s agreement to protect the confidentiality of the information. The Committee warned however that attorney-client privileged information would be preserved only if the circumstances under which the information is divulged does not waive the privilege under applicable law.

Avoid consulting with potential adversaries; Get assurances of confidentiality

The Committee also counseled against consulting with a lawyer who might potentially represent the opposing party because of the increased risk that any information disclosed could later be used against the client. The Committee also noted that in would be a violation of Rule 8.4(c) Misconduct if the lawyer were to consult with a potential adversary if the sole purpose of the consultation was to disqualify the consulted lawyer from any future involvement in the matter. Finally, the Committee advised that the consulting lawyer should get an agreement from the consulted lawyer that he will protect the confidences of his client, and that he will not engage in a representation adverse to his client. In the event that the consulting lawyer cannot get such assurances, he should consider whether he should proceed with the consultation.

The consulted lawyer

The Committee also considered the issues from the consulted lawyer’s perspective. The Committee noted that the consulted lawyer does not normally have a lawyer-client relationship with the consulting lawyer’s client, but that he may assume the responsibility to preserve confidential information acquired during the consultation that may affect his ability to represent his own clients in the future.

The Committee also considered, and decided not to extend the analysis of ABA Formal Opinion 90-358 Protection of Information Imparted by Prospective Client (1990) to lawyer-to-lawyer consultations (See Also Rule 1.18 Duties to Prospective Client which was added to the Model Rules pursuant to the ABA Ethics 2000 Commission’s recommendations.) Under certain circumstances, Opinion 90-358 would oblige the lawyer to protect information imparted by a would-be client. The Committee stated that since the consulted lawyer did not have a lawyer client relationship with the consulting lawyer’s client, the analysis of Opinion 90-358 did not apply. Furthermore, the Committee stated that to apply the reasoning of the opinion “would discourage lawyers from agreeing to share knowledge and experience with others, and would thereby diminish the overall quality of legal services rendered to clients.”

The Committee noted that the consulted lawyer may have an obligations to protect confidential information learned during the consultation, particularly where he has agreed to do so. He may also be obliged to protect the information if, because of the sensitive nature of the consultation, a reasonable lawyer would assume that it should be kept in confidence.

In the event that the consulting lawyer does not get the consulted lawyer’s agreement to maintain confidentiality, if the consulted lawyer subsequently comes to represent a client whose interests are adverse to the consulting lawyer’s client on whose behalf the lawyer was consulted, there would be no bar to the lawyer’s handling the matter, and the consulted lawyer would not be subject to “springing” conflicts of interest.

The consulted lawyer should also take steps to ascertain that the advice given is not adverse to an existing client. In the event that the lawyer subsequently discovers that he has a client that was adversely affected by the consultation, he may have an obligation under Rule 1.4 Communication to inform the client of the consultation and its consequences. The consulted lawyer can avoid this problem by either learning the identity of the consulting lawyer’s client and then checking for conflicts, or by obtaining enough information to assure himself that the consulting lawyer’s client does not have interests adverse to one of his own.

Consulted lawyer should get waiver of conflicts

The Committee noted that the consulted lawyer can limit his ability to represent clients in the future if he agrees to enter into an agreement to maintain the consulting lawyer’s client confidences. As a practical matter, he would have to enter the consulting lawyer’s client’s name in his client database so as to avoid undertaking an adverse representation that implicates Rule 1.7(b) (now in substance Rule 1.7(a)(2) Conflict of Interest: Current Clients). The opinion suggests that the consulted lawyer obtain a waiver of conflicts of interest from the consulting lawyer that is authorized by his client so that the consultation will not create any obligations to the consulting lawyer’s client.

Since the issuance of Formal Opinion 98-411, the Comment to Rule 1.6 was amended pursuant to the ABA Ethics 2000 Commission’s (E2K) recommendations adding paragraph 4 which states as follows:

[4] Paragraph (a) prohibits a lawyer from revealing information relating to the representation of a client. This prohibition also applies to disclosures by a lawyer that do not in themselves reveal protected information but could reasonably lead to the discovery of such information by a third person. A lawyer's use of a hypothetical to discuss issues relating to the representation is permissible so long as there is no reasonable likelihood that the listener will be able to ascertain the identity of the client or the situation involved.

The E2K Official Reporter’s note regarding the new paragraph 4 states:

[4] This new Comment reminds lawyers that the prohibition applies even when the disclosure does not itself reveal protected information but could lead to the discovery of such information, including the use of a hypothetical that poses an unreasonable risk that the listener will ascertain protected information. No change in substance is intended.

Maine Board of Bar Overseers Opinion 171 (1999)

Maine Board of Overseers Professional Ethics Commission, Op. 171, (1999) considered similar issues, but came to slightly different conclusions due in part to the differences between the ABA Model Rules and the 1999 version of the Maine Code of Professional Responsibility. The Commission’s opinion assumed circumstances where the consultation involved the disclosure of confidences and secrets that would lead to the identification of the client involved that could have adverse consequences to the client. As the Committee noted in footnote 1 of the opinion:

This assumption is required to formulate a question worthy of an opinion. In most cases it should be possible for a cautious and minimally competent attorney to seek and obtain the advice required without disclosing any confidences or secrets of the client or disqualifying the consulted attorney from future participation in the matter, by using hypothetical cases and other familiar devices to mask reality.


The Committee stated that if the consultation is for the benefit of the consulting lawyer’s client, the client’s consent for the disclosure is not required if the consulted lawyer does not represent a client with interests adverse to the consulting lawyer’s client, and the consulted lawyer either enters into an attorney-client relationship with the client or the consulting lawyer does not disclose privileged communications and the consulted lawyer agrees not to disclose or use secrets as defined by the 1999 version of Maine Bar Rule 3.6(h).

The Commission stated:

…Just as authority to disclose client information in consultations may be implied from the Maine Bar Rules and Maine Rules of Evidence, so limitations on these disclosures may be implied. Disclosures may extend no further than is necessary for a fruitful consultation.2 If it is not necessary to identify client X, if information adequate for the consultation may be conveyed in the form of hypothetical cases, if an abstract discussion of legal principles will suffice, these limitations should be observed. In any case, we conclude that A may not make a disclosure that would risk a waiver of the attorney-client privilege without client consent. Although this Commission is not authorized to opine on the Rules of Evidence, we believe that such a risk would be created if A disclosed a privileged communication received from X to B without establishing an attorney-client relationship between B and X. B's agreement not to disclose the information communicated by A may not plug this hole, although we conclude it would suffice to protect the client's interest in maintaining the confidentiality of a mere secret.

----------------------------------------------------------

Note that Rule 3.6(h) of the Maine Rules of Professional Conduct now states as follows:

(h) Confidentiality of Information

(1) Except as permitted by these rules, or when authorized in order to carry out the representation, or as required by law or by order of the court, a lawyer shall not, without informed consent, knowingly disclose or use information (except information generally known) that:

(i) Is protected by the attorney-client privilege in any jurisdiction relevant to the representation;

(ii) Is information gained in the course of representation of a client or former client for which that client or former client has requested confidential treatment;

(iii) Is information gained in the course of representation of the client or former client and the disclosure of which would be detrimental to a material interest of the client or former client; or

(iv) Is information received from a prospective client, the disclosure of which would be detrimental to a material interest of that prospective client, when the information is provided under circumstances in which the prospective client has a reasonable expectation that the information will not be disclosed.


© 2009 American Bar Association"

FIGHTING SCHOOL DISTRICT DECISIONS

Education Law Section 310 provides that persons considering themselves aggrieved by an action taken at a school district meeting or by school authorities may appeal to the Commissioner of Education for a review of such action. In addition, Education Law Section 306 allows the Commissioner of Education to remove a trustee, member of a board of education and certain other school officers for willful misconduct or neglect of duty. Procedures for the presentation and defense of such appeals and for the conduct of proceedings for the removal of school officials are contained in regulations of the Commissioner of Education. Special procedures apply to appeals involving homeless children and youth. Although, once again, I always suggest consulting an attorney, the appeal process is simple and most information can be found on the web. Go to the NYSED Office of Counsel website at http://www.counsel.nysed.gov/appeals/

EDUCATIONAL ISSUES IN DIVORCE

The Court of Appeals recently in Fuentes v. Bd. of Educ. of City of NY, 12 NY3d 309 (April 30, 2009) ruled that unless the parties in an agreement express otherwise, or the court does in a decree or order, the custodial parent has sole decision-making authority with respect to practically all aspects of the child's upbringing, including but not limited to, educational decisions. This decision emphasizes the importance of divorcing, separated or other co-parents to determine these issues in advance. This case involved the noncustodial parent seeking a review of the special education services that a legally blind son was receiving and which the non-custodial parent deemed inadequate. When the non-custodial parent sought review by the education department, the appeal was denied due to lack of standing, viz., the non-custodial parent was not the proper party to make educational decisions for the child. Any party, whether married, separated or in any type of custody hearing, should realize the loss of certain parenting rights when sole and exclusive custody is given to the other parent.

FOR THE SELF REPRESENTED

There are web sites that can also give you general information about specific areas of law. Some of these are listed below:

NYS Unified Court System, Court Help at http://www.nycourthelp.gov

NYS Bar Association (click on "For The Community") at http://www.nysba.org

Law.Com at http://www.law.com

Again, I always suggest to those who are self representing to also seek the assistance of legal counsel.

FOR THE SELF REPRESENTED

There is an old saying that "he who is his own lawyer has a fool for a client". In these economic times, that saying may not be relevant. Nassau County has an office of the self represented and they can assist you Wednesdays from 2:00 - 4:30 pm or at 516 571-3252.

But I always suggest to those who are self representing to also seek the assistance of legal counsel.

LEGAL SERVICES IN NASSAU COUNTY

When in need of a lawyer and your funds are low, rather than turning to the Yellow Pages and newspaper ads, contact the Nassau County Bar Association Lawyer Referral Service at 516 747-8848. Attorneys you will be referred to may agree to take on your case on a reduced fee basis. Also, if your income and assets are low and you meet certain qualifying standards, you may be able to obtain free legal services from the Nassau/Suffolk Law Services Committee, Inc at 516 292-8299 and 631 232-2400. We'll be talking more later about other approaches that can be used to save on legal fees.

STATEMENT OF CLIENT RESPONSIBILITIES

Of course, following yesterday's blog, the New York State Bar Association also has listed on it's website a Statement of Client’s Responsibilities. Here it is. I mention this because sometimes a huge hindrance to achieving a proper result can be attributed to the client. I have seen situations where the client will not return calls from the lawyer, or will only speak to lawyers through text messaging or email, or will not let the lawyer talk to them, or will withhold pertinent information and/or facts, or will ask the lawyer to present a misstatement for them, or will ignore all of the lawyer's advice and still ask the lawyer to represent them and get a certain result, and, of course, will not pay the fee as agreed. In my opinion, lawyers must be civil to other lawyers and lawyers and clients should also be civil to each other.

STATEMENT OF CLIENT RESPONSIBILITIES

Reciprocal trust, courtesy and respect are the hallmarks of the attorney-client relationship. Within that relationship, the client looks to the attorney for expertise, education, sound judgment, protection, advocacy and representation. These expectations can be achieved only if the client fulfills the following responsibilities:

1. The client is expected to treat the lawyer and the lawyer's staff with courtesy and consideration.

2. The client's relationship with the lawyer must be one of complete candor and the lawyer must be apprised of all facts or circumstances of the matter being handled by the lawyer even if the client believes that those facts may be detrimental to the client's cause or unflattering to the client.

3. The client must honor the fee arrangement as agreed to with the lawyer, in accordance with law.

4. All bills for services rendered which are tendered to the client pursuant to the agreed upon fee arrangement should be paid promptly.

5. The client may withdraw from the attorney-client relationship, subject to financial commitments under the agreed to fee arrangement, and, in certain circumstances, subject to court approval.

6. Although the client should expect that his or her correspondence, telephone calls and other communications will be answered within a reasonable time frame, the client should recognize that the lawyer has other clients equally demanding of the lawyer's time and attention.

7. The client should maintain contact with the lawyer, promptly notify the lawyer of any change in telephone number or address and respond promptly to a request by the lawyer for information and cooperation.

8. The client must realize that the lawyer need respect only legitimate objectives of the client and that the lawyer will not advocate or propose positions which are unprofessional or contrary to law or the Lawyer's Code of Professional responsibility.

9. The lawyer may be unable to accept a case if the lawyer has previous professional commitments which will result in inadequate time being available for the proper representation of a new client.

10. A lawyer is under no obligation to accept a client if the lawyer determines that the cause of the client is without merit, a conflict of interest would exist or that a suitable working relationship with the client is not likely.