Taxation & Estate Planning

N.Y. Court Suspends Lawyer Accused of Taking Money From Judge's Guardianship Estate Funds

By Juan C. Antúnez

An article written by Anthony Lin of the New York Law Journal entitled N.Y. Court Suspends Lawyer Accused of Taking Money From Judge's Estate underscores the wisdom of building systemic, structural safeguards against malfeasance into ALL guardianship proceedings.  In Miami-Dade and Broward counties probate judges require the liquid funds of ALL probate or guardianship estates to be immediately deposited into a "restricted depository account" governed by F.S. 69.031.

Although some grouse about the minor expense and delay caused by a blanket policy requiring restricted depository accounts for ALL estates, those "costs" are far outweighed by the obvious advantage of eliminating the "moral hazards" inherent to attorneys (often solo practitioners) holding estate funds in their own firms' escrow accounts and paying themselves from these funds without having to justify such payments to any third party in advance.

The following excerpts from the linked-to New York Law Journal article prove - again - why systemic, structural safeguards, such as Florida's restricted depository account regime, are a good idea.

Emani P. Taylor has been the subject of disciplinary proceeding over her alleged withdrawal without authorization of $327,100 from accounts of John L. Phillips, a onetime Civil Court judge who was ruled mentally incompetent in 2002. Taylor, who served as Phillips' guardian from 2003 to 2006, has acknowledged withdrawing some money but claims she did so properly to pay both herself and others for services rendered.

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Citing Taylor's lack of cooperation, the court said it would accept as uncontested an accounting prepared by a court-appointed examiner of the period during which Taylor acted as Phillips' guardian. According to this accounting, Taylor wrote $200,000 in checks to herself from guardianship accounts for supposed retainers and legal fees. Another $69,000 was paid to herself or to "cash" for supposed expenses, and another $57,000 was withdrawn in cash.

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"While [Taylor] was entitled to be compensated for the work she performed for three years, self-help to guardianship funds is not the way to proceed," the court said.

The court also said it was "very disturbing" that Taylor had applied to the court for $853,100 in legal fees relating to her guardianship but did not disclose that she had already withdrawn from the guardianship account more than $327,000 for her own use.

Full post as published by Florida Probate Litigation Blog on January 03, 2008 (boomark / email).