Oversight of Court-Appointed Fiduciaries

In previous annual reports, the Commission has commented on certain reforms implemented by the court system regarding the appointment and oversight of court-appointed fiduciaries, such as guardians, receivers and conservators. Periodically, published reports highlighting certain shortcomings in the process, or alleging that particular fiduciaries are acting wrongfully, prompt a review of the applicable rules and regulations.

In December 2001, the report of a blue-ribbon panel created by Chief Judge Judith S. Kaye criticized the lack of effective oversight over the fiduciary system and the individual fiduciaries themselves. One of the first reforms was to certify a list of fiduciaries from which judges must select, although there is a provision allowing them to pick someone not on the list in special circumstances so long as they provide an explanation as to why they did so. The reform also limited to one the number of lucrative appointments any individual fiduciary can get in a year.

When a fiduciary is believed to have acted wrongfully, there are various options. For example, (1) a party may bring the matter to the attention of the judge who appointed the fiduciary, (2) the Commission may investigate a complaint against the judge who may have failed to oversee or scrutinize the fiduciary’s activities, or may even have been complicit in the fiduciary’s misconduct, and (3) the court system’s Inspector General may investigate the fiduciary.

(1) An interested party, such as an heir or a creditor, may make an application to the judge who appointed the fiduciary. They may ask for an accounting or a new fiduciary. However, most people do not have the resources or expertise to discover that a fiduciary was malfeasant, or to hire a lawyer to pursue their claim. In estates where there are few, faraway or even no heirs, it would be even less likely that a fiduciary’s misconduct would be spotted and reported.

(2) Where the Commission learns that a judge may have negligently appointed a fiduciary or neglected to oversee or scrutinize the work of a fiduciary, resulting in misconduct by the fiduciary, it may investigate and hold the judge accountable. For example, in Matter of Feinberg, a Brooklyn Surrogate was removed from office, and in Matter of Holzman, a Bronx Surrogate was censured.

(3) For investigating the actions of the fiduciaries, the court system has a Special Inspector General for Fiduciary Matters. The Fiduciary IG has authority to investigate malfeasance by fiduciaries and their agents.

Inasmuch as the fiduciary system relies on so many appointees from around the state, the skills brought to the task can vary widely, and monitoring the performances of so many individuals is most difficult. One model that may be worth exploring is the California Professional Fiduciaries Act, which created a Professional Fiduciaries Bureau within the Department of Consumer Affairs. The Bureau handles the licensing of professional fiduciaries, the investigation, and the disciplining of fiduciaries for wrongdoing. It covers guardians and conservators of the living, and the personal representatives of decedent estates.

For its part, the Commission will continue to investigate meritorious complaints of judicial misconduct regarding fiduciary appointments or oversight and, where warranted, take appropriate disciplinary action. The Commission would also participate in a joint effort – with officials of the court system, the Governor, Attorney General, State Comptroller, the Legislature, the state and local bar associations, reputable civic reform groups and other stakeholders – to review and recommend reforms to the current system.

From the 2025 Annual Report, pages 29-30.

Recent Amendments to the Rules of Fiduciary Appointments

Part 36 of the Rules of the Chief Judge governs certain fiduciary appointments, such as a guardian or receiver. Among other things, Part 36 limits the number of appointments that any individual may receive in a 12-month period, and it requires the judge to make secondary appointments, such as counsel, rather than delegate such authority to the receiver.

In the wake of a December 2001 report to the Chief Judge by the court system’s Special Inspector General for Fiduciary Appointments, and a report by the Chief Judge’s Commission on Fiduciary Appointments, Part 36 was recently amended to make the appointment constraints more stringent.

The new provisions, which were approved by the Court of Appeals and supported by the Presiding Justices of the four Appellate Divisions, inter alia disqualify former judges from receiving appointments within their former jurisdictions for two years after leaving the bench. They also disqualify any lawyer who earned more than $50,000 from court appointments in a single year from receiving any new appointments in the following year.

The new provisions include a requirement that a law firm whose members, associates and employees have had a total of $50,000 or more in compensation approved in a single calendar year, report such amounts to the Chief Administrator of the Courts.

The new provisions also specify a range of individuals who would be disqualified from fiduciary appointments, as follows:

From the 2003 Annual Report, pages 27-28.

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Favoritism and the Appearance of Favoritism in Fiduciary Appointments

The Commission’s 2001 Annual Report reminded judges that Part 36 of the Rules of the Chief Judge, governing certain fiduciary appointments, provides that the judge must appoint “persons designated to perform services for a receiver … upon evaluation by that judge of the qualifications of candidates for appointment.” The purpose of this rule is to establish appropriate controls that would not otherwise exist with respect to lucrative designations of secondary appointments.

Apparently, some judges had not accepted this message and responsibility under Part 36, notwithstanding an explicit memorandum from Chief Administrative Judge Jonathan Lippman in March 2000, and follow-up memoranda from and meetings with other administrative judges. Judges, for example, had signed orders to appoint a receiver in which the receiver is explicitly authorized to make such secondary appointments as a managing agent or attorney. Such delegations to the receiver are contrary to Part 36.

Until a court rules otherwise, Part 36 represents the law, and judges are expected to honor the spirit and letter of that provision of law. To avoid even a mistaken delegation to a receiver of the court’s duty to make such secondary appointments, judges must pay close attention to the designation-of-receiver orders presented for their approval.

The Commission investigated several judges who did not appear to be abiding by Part 36, even after the March 2000 memorandum from the Chief Administrative Judge. Each of the investigated judges had given the court-appointed primary fiduciary the discretion to make secondary appointments in one or two cases. All but one of the judges explained that they did not intentionally violate Part 36, that their delegation of the secondary appointment power was inadvertent, and that they agreed to abide by Part 36 in the future. The remaining judge expressed the view that Part 36 is inconsistent with state law, but that he would abide by Part 36 in the future, pending resolution in the courts of the issue of the validity of Part 36. Thus, all of the judges recognize that Part 36 is the law in New York State.

Adherence to this particular provision of Part 36 should eliminate some of the shocking disclosures made in a December 2001 report to the Chief Judge by the court system’s Special Inspector General for Fiduciary Appointments, including the relatives of judges in one county getting a majority of highly lucrative secondary fiduciary appointments, e.g. as counsel to a receiver.

From the 2002 Annual Report, pages 26-27.