A New York appeals court holds that the trial court properly imposed a surcharge on the administrator of a Medicaid recipient's estate because the administrator breached her fiduciary duty by not selling the estate's property in a reasonable amount of time, thereby dissipating the estate's assets that would have been available for Medicaid recovery. Matter of Estate of Shambo (N.Y. Sup. Ct., App. Div., 3rdDept., No. 526709, Feb. 21, 2019).
William and Penny Lee Shambo owned a house together that had a mortgage on it. Ms. Shambo received Medicaid benefits. When Mr. Shambo died, his daughter, Melissa Thompson, was appointed administrator of his estate. The court gave Ms. Thompson authority to sell the house to herself and her husband and sister for a discounted price, but Ms. Thompson never sold the property. Ms. Shambo died in 2009, and in 2012 Ms. Thompson filed for administration of the estate.
The state filed a claim against the estate for recovery of Medicaid benefits. In 2013, the probate court again authorized Ms. Thompson to sell the property. Wells Fargo commenced a foreclosure action on the property, and the court determined that the bank's claim had priority over the state's claim. In 2015, Ms. Thompson finally sold the property to her husband for $110,000. The state filed an objection to Ms. Thompson's accounting of the estate and sought surcharges against her, arguing that she failed to sell the property in a reasonable amount of time. The trial court granted the state's motion for summary judgment, finding that the property reasonably should have sold for $117,500 in July 2013, removing Ms. Thompson as administrator, and imposing a $14,174.74 surcharge on Ms. Thompson. Ms. Thompson appealed.
The New York Supreme Court, Appellate Division, Third Department, affirms, holding that the surcharge was proper to put the state in the position that it would have been in had Ms. Thompson sold the real property at a reasonable price, within a reasonable amount of time. According to the court, Ms. Thompson's "delay and dilatory conduct in selling the real property caused a dissipation of the assets that would have been available to [the state] absent such delay." However, the court finds that the reasonable price for the sale of the property was $110,000 and reduces the surcharge to $4,324.74.
For the full text of this decision, go to: https://law.justia.com/cases/new-york/appellate-division-third-department/2019/526709.html
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