PROCEDURAL HISTORY

A petition pursuant to Mental Hygiene Law Article 81 was filed by C. O. on November 19, 2018, seeking the appointment of a Guardian of the Person and Property of her mother, G. P. (AIP). Following an initial hearing in this proceeding at the Broome County Supreme Courthouse on December 21, 2018, M. G., Esq. was appointed as Temporary Property Guardian of AIP, with AIP's consent. The Court concluded the hearing on March 8, 2019, at which time the Court found that the appointment of a guardian of the person and property was appropriate based on a finding that AIP lacks capacity and appointed M. G. the permanent guardian of AIP's property. The Court also appointed AIP's sister, S. H., as guardian of her person.

On July 26, 2019, the Property Guardian filed a motion seeking an order to amend the AIP's Living Trust, and by Decision and Order dated September 18, 2019, the Court appointed the Property Guardian as successor trustee and revoked the appointment if any other individuals as trustee of the trust.

On September 13, 2019, the Property Guardian filed two petitions seeking Court authorization to sell two parcels of unimproved real property owned by AIP. One petition pertains to real property located on Wilcox Road in Oxford, Chenango County, New York and the other petition pertains to real property located on Northrups Corner Road in Oxford, Chenango County, New York. The Court issued two orders to show cause, setting both matters for a hearing on October 15, 2019. By Order dated September 18, 2019, the Court reappointed William Thomas, Esq. as counsel to represent AIP.

Opposition to the two petitions was filed by Mr. Thomas on behalf of AIP on October 4, [*2]2019. Opposition was also filed by S. H. on October 3, 2019, and by Deborah Wolf Miller, Esq., on behalf of AIP's son, S. P., in the form of two separate briefs, on October 7, 2019.

The petition for the Wilcox Road property alleges that it is an 18.68-acre parcel of abandoned agricultural land, and Property Guardian sought the opinion of a realtor regarding its fair market value. An attached letter from Keller Williams real estate broker Stacey Frazier contains her recommendation that the property be listed at $23,000. The Property Guardian listed the property through Keller Williams; a buyer made an offer of $24,000 in cash; and the Property Guardian entered a contract to sell the property on September 10, 2019. The contract is signed by the Property Guardian on behalf of AIP but does not state he is her guardian. The contract does not contain language that makes the sale contingent on Supreme Court authorization, though the guardian's power is so limited.

The petition for the Northrups Corner property alleges that it is a 28.82-acre parcel of abandoned agricultural land. The Property Guardian also sought the opinion of Ms. Frazier, who suggested by letter that that the property be listed at $37,500. The Property Guardian entered a contract to sell the property for $35,000 in cash on September 10, 2019, again not including contingency language requiring Supreme Court authorization.

Both petitions allege that "there are real property taxes are [sic] currently in arears in the amount of approximately $10,000.00 for all the properties owned by [AIP] and her Trust." Each also alleges AIP has unpaid legal fees previously ordered by the Court for this guardianship proceeding in the amount of approximately $15,000; credit card debt in excess of $9,600; a car loan with an unknown balance; and current 2019-2020 school tax bills totaling $5,634.43. The petitions contain information about a monthly budget for AIP, indicating that she receives $3,641.04 in monthly Social Security and VA benefits, and she has $3,349.14 per month in expenses. The petitions indicate that there "remains $1,336.84" in the guardianship bank account as of September 10, 2019. Each alleges it is "in the best interests of AIP's finances to liquidate this parcel of vacant land and apply the net proceeds to the outstanding debt," and the "best use of the assets is for them to be sold and the funds conservatively invested so they remain available for AIPs' future needs."

In opposition to the petitions, Mr. Thomas argues, on behalf of AIP, that AIP does not want any of her real property sold, as it has significant meaning to her, and she ultimately wishes to bequeath it to her children, if possible. He submits that nothing in the Court's Order Appointing Guardian requires the immediate sale of real property. Mr. Thomas affirms that he called the Chenango County real estate tax authorities and discovered that the last day to pay the real estate taxes on all four parcels of real property owned by AIP ^[FN1] before they go into foreclosure is March 31, 2021.

Mr. Thomas points out that the Court's previous order requires the Property Guardian to provide AIP's family members the first opportunity to purchase any real property, if it were to be sold, and that the Guardian did not offer to sell the properties to family members before listing them with the real estate broker. Mr. Thomas argues the Property Guardian has not investigated the ways in which the parcels of land could produce income, and he suggests that the land be [*3]explored for potential timbering, rental of the fields for agriculture, renting the improvements on the parcels for occupancy, and leasing some or all of the land for alternative energy production. For these reasons, Mr. Thomas asks that the petitions be denied, and the Court instruct the Property Guardian to investigate other ways the real properties can be turned into income-producing assets.

S. H. opposes the relief sought in the petition pertaining to the Wilcox Road property only, as she indicates she wishes to purchase that property. According to S. H., the property is a wooded lot that abuts the family farm, and AIP's personal happiness and well-being are closely tied with the properties.

With her opposition, the S. H. provides emails between herself and the Property Guardian, which indicate that she began to express a desire to purchase the Wilcox Road property on August 16, 2019. The emails show that on September 5, 2019, the Property Guardian told her he received a cash offer on the Wilcox Road property for $23,000. On September 6, 2019, S. H. responded that she thought she would buy it and asked several questions; on the same date, the Property Guardian responded that he needed her to give a firm answer; she replied that she would purchase the property for $23,000; and he said he would prepare a contract to that effect. The emails also show that on September 9, 2019, the Property Guardian wrote to her indicating the other party offered more money and he was going to accept the offer.

S. H. also provides an August 8, 2019 email to the Property Guardian by which she made suggestions regarding how the properties could become self-sustaining and income-producing.

S. H., as Guardian of the Person, raises an issue regarding her hiring of a personal companion for AIP, explaining that the companion was hired in June 2019 and was never paid by the Property Guardian, so she quit. According to S. H., a new personal companion was to begin working for AIP on October 1, 2019.

S. P. requests dismissal of both petitions. He submits that the contract for the Northrups Corner property was not signed by the Property Guardian until after the offer expired, making it invalid, and points out that the Property Guardian did not include language that conditions the ultimate sale of the property on Supreme Court approval, putting AIP at risk of a breach of contract action. S. P. posits that the properties may have been undervalued by the listing agent, as her opinion letters are unsupported by written information on comparable sales or other evidence to show how she established fair market values.

Citing the monthly budget provided by the Property Guardian in both petitions, S. P. argues that the sale of these properties isn't necessary to provide for the current maintenance and support of AIP because her immediate expenses are all being met by her monthly income.

According to S. P., the petitions are deficient and should be dismissed because they do not fully disclose AIP's assets, or the potential means available to pay her longer-term debts and the back taxes. In support of this position, he references a $10,000 VA Life Insurance policy owned by AIP's deceased spouse; $14,000 held by C. O. as of the commencement of the guardianship proceeding in November 2018; a possible tax exemption for AIP's property on Manwarren Road; the use of the equity in her real property to pay the back taxes or credit card debt; and the rental income potential for the properties. S. P. indicates that the Property Guardian's office instructed him not to communicate directly with the Property Guardian, making it difficult for S. P. to make suggestions to the Property Guardian as to possible ways to generate income for AIP.

Like Mr. Thomas and the Guardian of the Person, S. P. is critical of the Property Guardian entering contracts with third-party purchasers before giving family members a meaningful opportunity to purchase the subject properties. He also indicates that the Property Guardian wrongfully paid legal fees before paying AIP's debts, in contravention of the Court's May 22, 2019 order and submits that the property guardian may have had sufficient funds to address the longer-term debts of AIP if he had prioritized those debts over payment of the legal fees.

S. P. requests denial of the petitions; an order directing the Property Guardian to provide a "thorough and complete accounting" of AIP's finances; denial of the Property Guardian's "commission" with regard to the filing of these petitions; and an order directing the Property Guardian to recover all legal fees paid from AIP's funds, to conform to the Court's May 22, 2019 Order.

The hearing on these petitions was conducted on October 15, 2019, at which AIP appeared with Mr. Thomas; S. P. appeared with Ms. Miller; the Property Guardian appeared; and the Guardian of the Person and another of AIP's sons, B. P., appeared. Prior to the commencement of the hearing, Ms. Wolf made a motion to summarily dismiss the petitions, which the Court denied, finding that the petitions made a prima facie case for the proposed sales.

The Property Guardian testified in support of the petitions and provided a spreadsheet version of the checkbook register kept for AIP's guardianship account, which was accepted into evidence as Petitioner's Exhibit 1. The Property Guardian testified that AIP has a USAA Bank account in the amount of approximately $24,000, which was not accounted for in his Initial Report or the two petitions. He also stated that he was not yet able to access the funds in the account. The Property Guardian confirmed that AIP has a health savings account, set forth in his Initial Report, that he had not yet accessed or used to reimburse her medical or dental expenses. The Property Guardian testified that both the funds previously held by C. O. and the VA Life Insurance benefit have been received and are reflected in the current guardianship account balance. Testimony and discussion among counsel clarified that the total amount of back taxes owed by AIP on her four properties (two of which are not subjects of these petitions) is approximately $39,000.

On cross-examination, the Property Guardian testified that he declined S. P.'s offer to provide free labor on the properties to improve them for possible rental, and he did not investigate the feasibility of the plans proposed by S. P. or S. H. He testified that he did not recall if he had asked the AIP if she had any additional cash on hand at the time he became guardian prior to completing the Initial Report.

The Court reserved decision, allowing the parties additional time to submit written summations. Ms. Miller, on behalf of S. P., submitted a written summation supported by exhibits and an affidavit from S. P., on October 29, 2019. No other parties submitted anything in writing following the hearing.

Mental Hygiene Law 81.20(a)(6)(i) dictates that

a guardian who is given authority with respect to property management for the incapacitated person shall afford the incapacitated person the greatest amount of independence and self-determination with respect to property management in light of that person's functional level, understanding and appreciation of his or her functional [*4]limitations, and personal wishes, preferences and desires with regard to managing the activities of daily living. . .

The statute allows the Court to authorize the property guardian to exercise necessary powers to manage an incapacitated person's property and financial affairs and provide the person with support and maintenance, but the statute limits the grant of such authorization to the "least restrictive form of intervention." MHL 81.21.(a); see also Matter of Carol C., 41 AD3d 474 (2d Dept 2007) (selling incapacitated person's home and relocating her to a condominium constituted the least restrictive form of intervention to provide for the incapacitated person's needs); Matter of Cheryl B.K., 45 Misc 3d 1227(A) (Sup Ct, Broome County 2003) (citing Matter of Williams, 194 Misc 2d 793, 798 [Sup Ct, Suffolk County 2003]) ("While the 'best interest' of [the incapacitated person] is a guiding principal for the Court, the Court must be careful not to unduly substitute its judgment for the judgment of [the incapacitated person.]").

The Property Guardian has filed two petitions seeking Court authorization to exercise power (v) in the March 27, 2019 Order which grants the property guardian the power to

[s]ell real property for the benefit of AIP upon authorization by the Court. If and to the extent the sale of real property is necessary, family members shall have the first opportunity to purchase said property.

In addition to the statute's requirement that any exercise of the property guardian's powers constitute the least restrictive form of intervention to manage the incapacitated person's property, the Court has already found that any such sale of property must be necessary and that family members must have the first opportunity to purchase the real property.

Based on the written submissions by all parties and the testimony adduced at the hearing, the Court finds that the proposed sale of the Wilcox Road property and Northrups Corner property do not constitute the least restrictive form of intervention to provide for AIP's maintenance and support at this time, for the following reasons.

AIP and some of her family members have expressed strenuous objection to the sale of the subject parcels of real property. The Court and the Property Guardian are tasked with affording AIP the greatest amount of self-determination with regard to her property. MHL §81.20(a)(6)(ii). AIP's desire to continue to own the subject parcels must be counterbalanced with the need to provide for her ongoing maintenance and support and the management of her outstanding debts.

It is not disputed that AIP's monthly income covers her monthly expenses, with a few hundred dollars left over after the payment of her bills. The primary issue in this guardianship is how to adequately address AIP's longer-term debts, including her credit card bill, the legal fees owed in connection with this guardianship case, and the back taxes owed on the subject parcels and her other two properties, which total approximately $39,000. In the opposition filed by Mr. Thomas, it was established that the four properties will not go into foreclosure until March 31, 2021, which means that AIP is not currently at imminent risk of the loss of the properties to foreclosure, an event that might eventually warrant the sale of the two subject properties, or other property, to pay the back taxes and protect AIP's equity. See In re Petition of G.F., 2011 NY Slip Op. 51785 (Sup Ct, Bronx County 2011) (unopposed petition to sell incapacitated person's real property denied when transfer of property not shown to be necessary).

In accordance with the "personal wishes, preferences and desires" of AIP to maintain [*5]ownership of all her properties, the Property Guardian has a fiduciary duty to try to pay the overdue taxes before being authorized to sell any of her real property. At the hearing, additional previously unknown financial information was revealed, including the existence of the USAA account containing about $24,000 and the health savings account containing approximately $17,500. If the funds in the USAA account are made available to the Property Guardian in a reasonable time frame, the use of those funds to pay some of the back taxes owed on AIP's properties in lieu of the sale of those properties would be consistent with AIP's clearly expressed desires and a lesser form of intervention to meet her long-term needs. Similarly, the Property Guardian should use the health savings account to reimburse AIP's medically related expenses paid from her other resources and use it for such expenses going forward.

One of AIP's outstanding debts is the Court ordered legal fees connected with this guardianship. S. P. correctly points out that the Property Guardian paid legal fees inconsistent with this Court's May 22, 2019 Order, which indicated a priority of payment as follows: Zachary Morahan, Esq.(the Court Evaluator), William Thomas, Esq., Janet Richmond, Esq., and Jeffrey Nowak, Esq. The checkbook register shows that Mr. Morahan had already been paid in full on April 18, 2019. Once the Court issued the May 22, 2019 Decision and Order, Mr. Thomas should have been paid in full before either of the other attorneys were paid any legal fees. Instead, Mr. Thomas was paid $3,000, Ms. Richmond was paid $3,000, and Mr. Nowak was paid $2,500.^[FN2]

The payments to Ms. Richmond and Mr. Nowak were made inappropriately, but the Court is not going to direct the Property Guardian to recover the fees paid to Ms. Richmond. The application of $6,000 toward court-ordered legal fees is not entirely inappropriate because the Court did direct their payment, and the $3,000 amount paid to Ms. Richmond does not have a substantial impact on the AIP's overall debt picture. The Court finds these fee payments consistent with the direction to the Property Guardian to pay the ordered fees "if and as the guardianship estate has the resources in place to pay them without putting the AIP or her property at financial risk."

The Court is not going to micromanage how the Property Guardian should pay AIP's debts moving forward. The Court is not going to substitute its judgment for that of the Property Guardian, consistent with the statutory prohibition on the Court substituting its judgment for that of the incapacitated person. Cheryl B.K, supra. The AIP's additional resources that have been identified through the pleadings and hearing testimony may not be sufficient to clear all her debts, but the property guardian is tasked with exercising his discretion to determine, consistent with Court orders, what payments should be made in what order to ensure AIP the greatest amount of self-determination and independence over her real property.

S. P. has averred that there is a viable plan for using some or all of the real property to generate cash to pay AIP's long-term debts. He submitted a plan with his post-hearing summation. The Property Guardian is tasked with reviewing the plan and making a determination whether the plan is viable and in AIP's best interest. Similarly, there was discussion in open Court during the hearing that prior to the filing of the guardianship petition in [*6]November 2018, some of AIP's funds may have been misappropriated.^[FN3] The Property Guardian's responsibilities include making a reasoned discretionary decision as to how to most effectively spend his time investigating and potentially recovering AIP's assets.

Through the course of this proceeding, the Court has become aware that S. P. was designated by the Veterans Administration as fiduciary for AIP, and he receives her monthly VA benefit. That income, and S. P.'s fiduciary designation, are not currently before the Court on these petitions. S. P. retains the right, as do all of AIP's children, to seek Court intervention regarding the actions of the Property Guardian. Now that the Court is aware of AIP's income flowing to an individual outside the parameters of this guardianship, should S. P. take any such action against the Property Guardian, he will have to establish his appropriate use of the VA benefit.^[FN4]

The Court is denying S. P.'s request for the denial of the Property Guardian's "commissions," as his compensation is not an issue currently before the Court. Similarly, the Court is not going to direct the Property Guardian to provide a full accounting, because he is already under that obligation as an appointee pursuant to Mental Hygiene Law § 81.31 and Part 36 of the Rules of the Chief Judge. It stands to reason that with the dismissal of these petitions, due in part to the lack of a full understanding of AIP's resources and debts, any subsequent petitions would need to be supported by a clearer overview of AIP's financial situation, including all relevant financial information about her income, assets, and debts.

The Property Guardian is reminded that he may seek Court action if he is prevented from effectively accessing and marshaling AIP's assets. All parties are reminded that even though these petitions have been denied, the Property Guardian may petition in the future for the sale of some or all of AIP's real property if, after his review of the relevant information, he determines such a sale is in her best interest and consistent with the least restrictive form of intervention to meet her needs.^[FN5] Final decision on a proposed sale will be made by the Court.

In furtherance of this Decision, it is hereby

ORDERED, that the two petitions filed by the Property Guardian for the approval of the sale of real property owned by AIP are denied.