In re D.K.L.
| Decision Date | 08 April 2022 |
| Docket Number | File No. 2022-167 |
| Citation | 75 Misc.3d 255,166 N.Y.S.3d 828 |
| Parties | In the MATTER OF the GUARDIANSHIP OF D.K.L. (B.L.), an Infant under Age 14. |
| Court | New York Surrogate Court |
B.L., guardian pro se.
Michael G. Hayes, S. By Decree dated February 24, 2022, this Court appointed B.L. and S.A. as the guardians of the property of their infant daughter, D.K.L. The Court granted this application pursuant to Article 17 of the Surrogate's Court Procedure Act.
SCPA § 1708[2] states that the Court may dispense with the filing of a bond when appointing a property guardian, subject to four conditions: (1) the Court must direct the guardian "to collect and receive the moneys and other property of the infant as directed by court order"; (2) any moneys collected must be "deposited in the name of the guardian" in a bank that has been designated by court order; (3) any moneys deposited in the guardianship account must not exceed the maximum insurable amount; and (4) no moneys deposited in the guardianship account shall be withdrawn or removed without an Order of the Court.
The February 24, 2022 Decree dispensed with the requirement of a bond, and imposed the mandatory SCPA § 1708 conditions. The Decree also designated an authorized bank to jointly hold D.K.L.’s property ("the Bank"), and ordered the guardians to file annual accountings pursuant to SCPA § 1719. Upon entry of the Decree, the Surrogate's Court Chief Clerk issued Letters of Guardianship of the Property to B.L. and S.A.
The infant's property includes an inheritance from her paternal grandmother, C.W., who died on August 11, 2021. That inheritance consists of a 100% interest in an annuity account managed by a life insurance company ("LIC").
The guardians have advised the Court that LIC has delivered a check paying over the full balance of the annuity account. However, the check has been made payable to B.L. as "Custodian of minor D.K.L.," rather than in his capacity as guardian.
The guardians have informed the Court that the Bank will not negotiate the check because of the incorrect "custodian" designation. The guardians have also advised the Court that the Bank will only accept a check for deposit in the court-mandated guardianship account if it is made payable to B.L. "as guardian of D.K.L."
Under New York law, there are a number of ways that a transfer can be made to a minor. One option is to "pay it to the guardian of the child's property, who then must comply with the rather onerous requirements for investing and accounting required by SCPA Article 17." (Turano , McKinney's Practice Commentaries to EPTL Art 7, Part 6 ). Another option that is sometimes available is to make the transfer to a "custodian" pursuant to the Uniform Transfers to Minors Act (UTMA). However, transfers that are deposited in a custodial account are subject to far less rigorous oversight and control than deposits to a guardianship account.
UTMA draws a clear distinction between a "custodian" and a "guardian". (See EPTL § 7-6.1[f],[h] ). The intrinsic differences between these two fiduciary roles include: (1) the method of appointment, and (2) the level of active court oversight after that appointment is made. An understanding of these differences reveals that "custodian" and "guardian" are not interchangeable terms, and underscores the importance of using the correct terminology when effecting a transfer of funds that will be held for the child's benefit.
A guardian is appointed by the Court after obtaining a background check through the NYS Office of Children and Family Services, and after making a considered judicial determination that the child's best interests will be served by appointing a guardian ( SCPA §§ 1706, 1707 ). In making this determination, the Court is not limited to appointing a parent of the child or to appointing the person nominated in the guardianship petition, and may instead make the appointment that serves the child's best interest. (id. )
Once this appointment is made, the guardian must file a detailed annual accounting with the Court ( SCPA § 1719 ). While those accounting requirements are relaxed slightly when the infant's property is held jointly with a bank designated by the Court, the...
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