07/17/2012 09:01:00 AM EST
Withdrawals from New York Guardianship Accounts and Investment of Guardianship Account Funds
By Hon. Eugene Peckham and Ms. Karen McMullen
The statutes and case law for withdrawal of funds from
guardianship accounts are based on common sense and the Surrogate's guided
discretion on what will be fair and beneficial. Further, the investment of
assets pursuant to an Investment Advisory Agreement is limited by the
Surrogate's examination to ensure reasonable fees are charged and the prudent
investor standard is followed. In this Analysis, Eugene Peckham and Karen
McMullen discuss the law in this area. They write:
The basic duty of a guardian is to preserve the funds in the
guardianship account, and, if possible, increase them, so that the funds may be
turned over to the ward when he or she reaches the age of majority. Surrogates'
Courts receive and review guardians' petitions for withdrawal from Article 17-A guardianship
accounts pursuant to SCPA 1713. The Surrogate must consider the relevant
statutory factors in the context of the ward's circumstances in order to decide
whether to permit a withdrawal. Further, the court must examine any Investment
Advisor Agreements or set a bond when guardianship funds are to be invested in
assets other than bank accounts or government bonds.
Basic Considerations for a Petition for Withdrawal
A Petition for withdrawal of funds from the guardianship account is authorized
by SCPA 1713. The court may direct the withdrawal for the support and education
of the ward or the funeral cost of a parent or other person if the estate of
that person is insufficient. Similar withdrawal rules are found in regard to
infant settlements and guardians under Mental Hygiene Law Article 81.
A detailed list of factors the court should consider is set forth at 22 NYCRR Section 202.67(f). If the guardian is the ward's
parent, the court must consider the parent's obligation to support his or her
child. The court considers the amount of the parent's income and assets
available and whether there are other children to be supported. Support has
been defined as anything "requisite to the housing, feeding, clothing,
health, proper recreation, vacation, traveling expenses or other proper cognate
purposes." If the parent is the ward's guardian, and the parent has
sufficient resources to pay for the ward's support and education, the court is
likely to deny or limit a request for withdrawal from the ward's funds.
The financial implications of the withdrawal are an essential
consideration in all instances. The court must consider the purpose for the
withdrawal and the reasonable cost of the item or service. Further, the court
will consider the amount of funds in the guardianship account and to what
extent the funds would be diminished by the withdrawal. In addition, any
specific future award to be received by the ward, such as a structured
settlement that includes payment of college expenses or lump sum payments when
the infant becomes an adult, will be considered at the time of a request for
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