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Judge Glen on Her Groundbreaking Opinion on Special Needs Trusts

July 23, 2013

Former New York Judge Kristin Booth Glen is being hailed as a hero in the autism and special needs communities for her bold and unprecedented ruling that banks and other special needs trustees must not only invest trust assets but also take decisive steps to determine the needs of people with disabilities and spend trust money to improve beneficiaries' lives.

Glen's decision, which she went to great lengths to render in the eleventh hour prior to her mandatory retirement at age 70 from New York County Surrogate's Court in Manhattan (11 p.m. EST on her very last day of work last New Year's Eve), drew widespread attention in the autism and special needs communities after it was the focus of a front-page article in The Village Voice last week.

The ruling stemmed from a case in which the attorney who had created a discretionary trust for Mark Holman, a severely autistic orphaned teen who was left a multimillion dollar trust fund by his adoptive mother Marie Holman, petitioned to become the teen's guardian in an attempt to fulfill Marie's dying wish.  Glen took the attorney as well as co-trustee JP Morgan Chase to task for failing to visit Mark Holman, determine his needs, notify the residential facility in which he lived of the trust, or spend any of Mark's trust funds on improving his life, all while collecting thousands of dollars in commissions.

“The history reveals a severely disabled, vulnerable, institutionalized young man, wholly dependent on Medicaid, unvisited and virtually abandoned, despite a multimillion dollar trust left for his care by his deceased mother,” Glen wrote in her opinion. “It's not sufficient for the trustees to simply safeguard the Mark Trust's assets; instead, the trustees have a duty to Mark to inquire into his condition and to apply trust income to improving it.” In her opinion, Glen described her decision as a “clarion call” for all special needs trustees. “Courts will intervene not only when the trustee behaves recklessly, but also when the trustee fails to exercise judgment altogether,” she wrote.

Glen recently spoke to Autism Speaks about her decision and its potential impact for people with autism and other developmental disabilities who are the beneficiaries of special needs or discretionary trusts.

Can you explain why you made this courageous ruling and what were you hoping to accomplish?

My final opinion on the accounting of the trust, which I had ordered, was an opportunity for me to say that if you are a fiduciary of a trust that is set up for a person with a disability, not just a special needs trust, but any trust where the beneficiary is clearly a person with a disability, you have a responsibility to utilize the funds for the purposes that the grantor, in this case the mom, set up the trust for. 

Unfortunately, what I wrote in my opinion is dicta as we say in the law, so it doesn't bind anybody. But what it was intended to do was shine a light on this practice to alert people that this kind of stuff was going on and to alert banks in particular that if they accept the role of trustee that they have an obligation that goes above and beyond just investing the money, which quite frankly they don't do particularly well either.

My opinion says something that nobody had ever said before. And I have to say we had done some research earlier … and I was sure that there would be all kinds of stuff about fiduciary obligations to beneficiaries and so forth and there was nothing. There was this one case in New York which I cite, a very different situation, and just really nothing else, and I was really shocked by it and I think it just highlights how much trust law – and it's funny because the word trust has two meanings – is just about the money and not about the human beings and their needs and so that's what happened.

What type of feedback have you received on your opinion in this case?

When the decision first came out, there was a lot of discussion in the legal community. I know it was out on a lot of blogs. I was at The Association of American Law Schools conference and a lot of people were talking about it. Many people who are advocates for people with disabilities thought it was great and people who represent banks didn't think it was so great. But obviously it was something that the general public didn't know about. Then the Village Voice article whipped up a lot of interest. I've received many wonderful emails from parents and people with disabilities saying thank you for caring and thank you for bringing this problem to the attention of the world.

Is Mark Holman's case considered unusual because it wound up in court? Don't most special needs trusts remain a private matter?

The problem is if the trust is for a person with a significant intellectual disability and the person who created the trust, the parent, or whoever, is dead, and the trustee is not acting appropriately, who is going to challenge it? Not the person with the significant intellectual disability who has a serious communicative disorder and is in an institution. They're not going to make it to the Surrogate's Court in New York County to say, “I want an accounting of my trust.” So that's one of the real problems here. It was just kind of a fluke that this came to my attention and as I think the (Village Voice) article indicated there are huge numbers of these special needs trusts and billions of dollars in these trusts and who's looking at them?

Do you think your decision will have an impact on special needs trusts beyond this case?

Two things could happen. One thing that could happen is that banks look at this and say, ‘You know, it's true; either we should put ourselves in a position to do what we need to do for people with special needs or we shouldn't take on these trusts, and if we decide that we're going to do what we need to do, we need to hire people like social workers to monitor these trusts and to make sure that the beneficiaries are getting what they need and that we're spending the money appropriately.' And as I understand it from people on the bar, and I'm certainly not making any recommendations here, but there are some banks that do that. So number one, if you are a parent or someone setting up a trust, you might really investigate if you're going to have a bank as a trustee whether it actually has that capacity and is doing that work or not.

The other thing that can happen because except by fluke the courts are not going to be involved in this is that there is a new concept called ‘trust protectors.'  I don't think we have a statute yet about it in New York; some states do. While you appoint A to be the trustee to manage the money and spend it, you appoint B to make sure A is doing it right. You could appoint a bank to do the money management and you could appoint a sibling or friend or neighbor, someone who cares about your kid, to make sure the money is being spent. They could check in on a quarterly or biannual basis to make sure the trustee is actually taking care of your child's needs. The trust protector would have power to go into court if the trustee is not acting appropriately.

When I first heard about it, I thought here's one more mouth feeding at the trough of the trust, but it occurred to me after I wrote this opinion that this might actually be a place where you can use a trust protector. I don't know whether a trust protector automatically can get you into court without a statute that says you have standing in court if you are a trust protector. But that doesn't mean you can't put in a trust protector. I think that the states in which the trust protector law is fairly mature and robust probably have new statutes that you can bring a proceeding if you are the trust protector.

Do you think other courts in New York or even nationwide could follow your ruling, or do you think your decision could lead to any type of legislation on special needs trusts?

Will other courts follow my decision … I hope so. But again the problem is a court won't see this sort of thing except by a fluke. So the real question is will the banks change their behavior and/or can we figure out a way for somebody to be watching the trustee because it's not going to be the courts. It doesn't get to court unless there's a problem. You need to have someone who's watching the trust. In the world as it exists today the trust protector is the best device to do that.

I've actually seen that at the annual meetings of trust and estate lawyers that there's been discussion about trust protectors and whether it's a good idea or a bad idea, or whether there should be legislation or not. I don't know where that is right now. 

Many people in the special needs community are calling you a hero. Do you feel you deserve this title or perhaps that every judge around the country should be making similar rulings on this type of case?

No, I certainly don't think I'm a hero but what I am is a person who by both study and connections to people with disabilities has a broader understanding of people with disabilities, their rights and their deeds. Disability is the invisible discrimination in our court system. We have looked at and educated people about gender bias, race and ethnicity bias. Judges now see these issues pretty clearly. But I think most judges are not knowledgeable about a wide range of disabilities, particularly intellectual disabilities. I think that there are huge numbers of stereotypes and I think that educating the judiciary about disabilities and about the rights of people with disabilities would mean that I'm not a hero for this opinion because everybody would have this on their radar screen and would have done the same thing if it came before them. 

What advice would you give to parents to ensure that what happened to Mark Holman doesn't happen to their children?

If they're going to set up trusts and they're going to use a bank, see if it is a bank that has the capability of doing what needs to be done. In America we seem to believe strongly in the marketplace and how the marketplace fixes everything,  so if every person who is creating a special needs trust asked the questions and insisted that the financial institutions have appropriate resources to utilize the income from trusts in a way that benefited the beneficiary with a disability, then the banks would do just that.