A VERY COMMON FAMILY DISPUTE

This is a common allegation and a common dispute when the caretaker of Mom or Dad is one of the siblings. In this case, we do not have the specific facts but it demonstrates that more than general allegations are needed.

Cascardo v Cascardo, 2018 NY Slip Op 0544,1 Decided on July 25, 2018, Appellate Division, Second Department:

"The plaintiff commenced this action against her brother, inter alia, to recover damages for fraud and breach of fiduciary duty in connection with powers of attorney executed by the parties' father, naming the defendant as his attorney-in-fact. The plaintiff alleges that the defendant fraudulently induced their father to execute a number of powers of attorney, and then used the powers of attorney to sell bonds jointly owned by the plaintiff and their father, close the father's various bank accounts, write checks and carry on banking transactions in the father's name, and obtain the father's social security and pension benefits. The defendant moved, among other things, for summary judgment dismissing the complaint, and the Supreme Court granted that branch of the motion.

In response to the defendant's prima facie showing of entitlement to judgment as a matter of law dismissing the complaint, made through admissible evidence, the plaintiff failed to raise a triable issue of fact (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853; Zuckerman v City of New York, 49 NY2d 557, 559). The plaintiff failed to present evidence that the defendant committed fraud or used duress or undue influence in connection with the powers of attorney executed by their father or any transaction where he acted as their father's attorney-in-fact, and failed to otherwise present a genuine issue of fact (see generally Ginsburg Dev. Cos., LLC v Carbone, 134 AD3d 890, 892-893; JAF Partners, Inc. v Rondout Sav. Bank, 72 AD3d 898).

The plaintiff's remaining contentions are not properly before this Court.

Accordingly, we agree with the Supreme Court's determination granting that branch of the defendant's motion which was for summary judgment dismissing the complaint."

POWER OF ATTORNEY ISSUES

In this case, the names mentioned are an attorney who had himself named as power of attorney and an attorney who prepared the papers. This case is interesting as it describes some potential ethical issues when counsel is asked to prepare these documents.

Matter of Mitchell 2016 NY Slip Op 50853(U) Decided on June 3, 2016 Supreme Court, Kings County Pesce, J.:

"Respondent argues in his post trial memorandum, that this Court should find that the $122,000 in gifts to Mr. Shadoian were proper, because: 1) it is movant's burden to show that the IP was suffering from mental infirmity at the time the gifts were made and that movant had offered no proof as to the IP's debilitated mental status on the specific dates the checks were issued ( See Lee v. Bank of NY, 294 AD2d [2d Dept 2002]; Gala v. Magarinos, 245 AD2d [2d Dept 1997]) and 2) despite the fact that the gifts were made to a fiduciary, there is nothing in the record to indicate that the gifts resulted form undue influence or that they were based on anything other than gratitude, affection and esteem. (See Matter of Hedges, 100 AD2d 586, [2d Dept 1984]).

Movant concedes that, typically, the burden of proving undue influence rests upon the party alleging it. (See Allen v. La Vand , 213 NY 322, 323 [1915]). Movant, however, advances [*6]the convincing and well established argument that if the donee of a transaction has a fiduciary or confidential relationship with the donor, the burden of proof shifts to the party receiving the benefit to prove by clear and convincing evidence that the transaction was fair and free of undue influence. (See Matter of Connelly, 193 AD2d 602 [2d Dept 1993]). Movant cites that this axiom was just reiterated by the Court of Appeals in Matter of Aoki, 27 NY3d 32 (2016) , where the court shifted the burden to the grantee that held a fiduciary relationship with the grantor.

However, an exception to that general rule provides that where a fiduciary relationship exists between the parties, the law of constructive fraud will operate to shift the burden to the party seeking to uphold the transaction to demonstrate the absence of fraud (see Matter of Aoki, supra, 39 citing Matter of Greiff, 92 NY2d 341, 345 [1998]).

It is uncontroverted that at the times of the gifts, to wit: January 23, 2012, April 24, 2012, June 15, 2012 and September 19, 2012, Mr. Shadoian was in two fiduciary relationships with the IP. He was the IP's attorney-in-fact and her health care proxy, and therefore it is Mr. Shadoian's obligation to prove that the IP freely and voluntarily gifted $122,000.00 to him. Under New York law, it is Mr. Shadoian's burden to prove that the IP made $122,000.00 of cash gifts to him knowingly and voluntarily, without the taint of undue influence.

To prove that the IP freely and knowingly made these gifts, Mr. Shadoian called Mr. Gagliardi to testify. Mr. Gagliardi's testimony did nothing to prove that the gifts were voluntary. He spoke to the IP briefly over the phone and met her one time for 30 minutes while the IP was in the company of Mr. Shadoian. Additionally, when Mr. Gagliardi telephoned the IP and she answered the phone and the two spoke, we do not know if Mr. Shadoian was present and influencing the IP. Mr. Gagliardi's testimony was too threadbare to carry much weight. He spent so little time with the IP that his impression cannot be given much weight, especially in light of the fact that Mr. Gagliardi was never informed that APS had intervened in the IP's life, that the IP had been prescribed Alzheimer medication, that she had been hospitalized on several occasions due to her own and Mr. Shadoian's neglect.

Moreover, Mr. Gagliardi failed to make even elementary inquiries as to the actual size of the IP's estate, her medical condition, her social and familial history. Contrary to usual practice, he allowed an unrelated person, designated as beneficiary, to orchestrate the completion and execution of the Will. As to the validity of the Will, it will have to be decided on another day in another court, if the Will ever arrives back in the United States from its sojourn in Iran.Also as Mr. Shadoian's case, two letters, purportedly from medical personnel, placed into evidence by Mr. Shadoian, stating the IP was fine are likewise given little to no weight. These providers were unaware of IP's hospitalizations or history with APS, and their statements are devoid of any medical basis for their declarations."

DEALING WITH PROBLEM ADULTS - LEGAL RIGHTS

To conclude, I will refer to earlier blogs regarding the use of power of attorney, living will, health care poxy, MOLST, will, trusts etc. Finally, I point out that ethical considerations do exist for attorneys who draft these documents for a "problem adult" at the request of a family member or other person: the news have been full of stories about predatory actions taken i.e. the Brooke Astor trial of her son and there are groups who are quite opposed to the concept of guardianship, etc. One of the more prominent groups is NASGA and their website is as follows:

http://www.stopguardianabuse.org/

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.

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.