Last month, the Federal Trade Commission voted 3-2 along party lines to impose a general ban on non-competes, claiming these arrangements stifle innovation, limit employee mobility and suppress wages. I blogged about the issue when the FTC proposed the ban last year.  So far, there have been three separate lawsuits seeking to block the ban, each asserting that the FTC has exceeded its authority and that the ban itself is arbitrary and capricious. Unless any of the legal challenges are successful, the ban will become effective on September 4, 2024.

While the FTC’s intentions to promote a more dynamic labor market are commendable, the blanket ban on non-competes is akin to throwing the baby out with the bathwater because it disregards its own acknowledgment that non-competes also have the effect of promoting innovation. Non-compete agreements, when used appropriately, play a crucial role in fostering training and research and development, thereby promoting innovation. A more balanced approach is needed to address the legitimate concerns while preserving the benefits non-competes offer.

When reforming a will or trust, the Surrogate’s Court “changes the language of the will [or trust instrument] itself by the addition or deletion of words in an attempt to conform [the instrument] to the decedent’s intent” (Matter of Stahle, NYLJ, Jan. 23, 2002, at 32 [Sur Ct, Onondaga County]).  Historically speaking, courts have been “hesitant to reform wills [and trusts,] unless the reformation effectuates the [testators and grantors’] intent” (Matter of Brill, NYLJ, Aug. 17, 2017, at 23 [Sur Ct, Bronx County]; Matter of Dousmanis, 190 AD3d 548, 549 [1st Dep’t 2021]).

However, when the reformation of a will or trust will result in a settlement of litigation, courts have been less hesitant to reform wills and trust instruments (Marilyn G. Ordover & Charles F. Gibbs, “Correcting Mistakes in Wills and Trusts”, NYLJ, Aug. 6, 1998, at 25).  This is because New York State has a strong public “policy encouraging family settlements” (Matter of Harburg, NYLJ, Aug. 12, 1997, at 26 [Sur Ct, New York County]).  Thus, in cases in which the interested parties have agreed to reform wills or trusts in order to achieve settlements, courts repeatedly have approved of the reformations to which the parties have stipulated (Matter of Schmitt, NYLJ, July 3, 2000, at 1 [Sur Ct, Westchester County]; Matter of Schwartz, NYLJ, Jan. 22, 1992, at 25 [Sur Ct, Westchester County]; Matter of Wilkie, NYLJ, Jan. 17, 1992, at 35 [Sur Ct, Westchester County]).      

A power of attorney (“POA”) allows a principal to assign their agent authority to make certain legal and financial decisions on their behalf. Because a POA can give an agent tremendous power over the principal’s affairs, claims of elder abuse in connection with a POA are common. While litigation concerning claims of abuse of a POA often occurs in the context of contested probate proceedings, special proceedings under Mental Hygiene Law (“MHL”) Article 81 (“Article 81”) and the General Obligations Law (“GOL”) increasingly involve claims that an agent is abusing a POA. This post delves into the options available under the MHL and GOL when one suspects abuse of a POA.

Advanced Directives in Guardianship Litigation. Because a guardianship under MHL Article 81 puts the alleged incapacitated person’s (“AIP”) constitutionally protected civil liberties at stake, the goal of Article 81 is to safeguard the AIP and further their best interests using the least restrictive form of intervention (see Matter of Samuel S. (Helene S.), 96 AD3d 954, 957-958 [2d Dept 2012]). Advanced directives, such as a POA or a health care proxy, being less restrictive than an Article 81 guardianship, often eliminate the need for one (see Matter of Isadora R., 5 AD3d 494 [2d Dept 2004]). Yet to obviate the need for guardianship, the advanced directive(s) must be working effectively, and the agent must have acted in the AIP’s best interests (see Matter of Rachel Z. (Jack Z.–Anna B.), 181 AD3d 805 [2d Dept 2020]).

 Appointing a guardian requires a two-pronged determination by clear and convincing evidence. First, that a guardian is “necessary to provide for the personal needs of that person, including food, clothing, shelter, health care, or safety and/or to manage the property and financial affairs of that person,” and second, that the AIP is either incapacitated or consents to the appointment of a guardian (MHL § 81.02[a][1] and [2]; see also Matter of Carole L., 136 AD3d 917 [2d Dept 2016])).  Even if the AIP is cognitively impaired, guardianship may not be necessary if the agent acts in the principal/AIP’s best interest to assist them with their activities of daily living (e.g., cooking, cleaning, bill paying).

Once the Court appoints a guardian, it has discretion under MHL § 81.29(d) to revoke a POA if the principal was incapacitated when the POA was executed or the agent breached their fiduciary duty (MHL § 81.29[d]). In a publicized case, Matter of Goldfein v Kohler, Paulette Kohler’s building manager filed a petition to appoint a temporary guardian for her. NBC New York reported that the petition alleged the agent, under a POA and health care proxy, engaged in elder abuse and was the subject of a criminal investigation. The Supreme Court revoked the advanced directives. But on appeal, the First Department found no evidence of financial impropriety by the agent or that Ms. Kohler lacked capacity when she executed her advanced directives (Matter of Goldfein v Kohler, 221 AD3d 500 [1st Dept 2023]). The Court even noted that building staff (the staff of the same building that commenced the guardianship proceeding) impeded the agent’s efforts to repair Ms. Kohler’s apartment. So the First Department reversed and reinstated Ms. Kohler’s advanced directives. The Court found it significant that the AIP “unequivocally expressed her wishes to have [the agent] care for her.” Indeed, MHL § 81.19(c) requires the Court to appoint a person nominated by the AIP unless the Court “determines such appointment is not appropriate” (MHL § 81.19[c]; see Matter of Audrey D., 48 AD3d 806 [2d Dept 2008]).