Guardianship doesn’t last forever. The Incapacitated Person (IP) could die, regain capacity, or move out of the country, among other reasons. Sometimes, the guardianship doesn’t end, but the guardian needs to resign. When this happens, the guardian must be discharged by the Court.
At first, the discharge process may seem complicated or confusing. But, like anything, practice makes perfect. Below is a simple, and general, step-by-step overview of the discharge process in a Mental Hygiene Law Article 81 adult guardianship proceeding in New York State.
Step 1: Filing the Motion for Discharge
First, the guardian (or the guardian’s counsel) will file a Verified Petition and proposed Order to Show Cause with the Court, along with the Final Account/Report. Some courts ask for a motion on Notice and Affidavit in Support instead of the Verified Petition and Order to Show Cause. You’ll need to review the particular Judge’s Rules and Local Court Rules, or if none exist, contact the Guardianship Department in your respective county to determine how the motion should be commenced.
There are exceptions to the motion requirement. For example, in Kings County (Brooklyn) if the IP died, and the guardian filed the Statement of Death, and Statement of Assets and Notice of Claim, the Court will automatically issue an Order directing the guardian to account and instructing next steps.
Step 2: Court Grants Motion for Discharge
Next, the Court signs the proposed Order to Show Cause (or Order), Appoints a Referee to review the Final Account/Report (which is usually the same person as the Court Examiner), and sets a return date. If the IP has no funds, or very limited funds, the Court may review the Final Account/Report itself without the appointment of a Referee.
Step 3: Referee’s Review
Third, the Referee will review the Final Account/Report. Depending on the complexity of the case, the Referee’s case load, and a myriad of other factors, the Referee may need additional time to review the Report beyond the return date. Adjournments of the initial return date assigned by the Court are common, and absent extraordinary circumstances, are almost always granted by the Court.
The Referee will ask the Guardian for documentation supporting the integrity of the Final Account/Report, such as bank statements. The Guardian should have a full record of its financial dealings in order to support its Final Account/Report.
Once the Referee completes their review of the Final Account/Report, they will prepare and issue the Referee’s Report, either approving the Final Account/Report or objecting to it in part or in whole. For purposes of this blog post, we’ll assume the Final Account/Report was approved.
Step 4: Settle Order Approving Final Account/Report
Once the Report is approved, the Court will direct the Guardian to settle an order approving the Final Account/Report on notice to all parties.
The Guardian drafts a proposed Order Settling the the Final Account/Report and serves the same on the parties with Notice of Settlement.
The Order should comply with CPLR 2219, which sets forth the requirements and form of orders in New York State, and should also contain a summary schedule of the Final Account/Report (I usually just use the same summary schedule in the Referee’s Report). The proposed Order should also include provisions for the award of fees to the Referee and counsel, and directives regarding the submission of a final Discharge Order, among other things.
The Guardian serves copies of the Notice of Settlement and proposed Order Settling Final Account/Report on the parties, and files the original with the Guardianship Department along with an affirmation or affidavit of service.
Step 5: Order Settling Final Account/Report Signed by Court
Fifth, the Court will sign the proposed Order Settling Final Account/Report and will direct the guardian to submit a Discharge Order ex parte with copies of cancelled checks and receipts demonstrating that the funds were paid to the correct parties. For example, if the IP is deceased, the funds remaining on hand will be remitted to the executor or administrator of the IP’s estate (or the Public Administrator). The Guardian will keep copies of cancelled checks showing the distribution to the fiduciary and submit those documents with its proposed Discharge Order. If the IP is alive, the Guardian will usually be directed to remit the funds to the IP or successor Guardian, depending on the circumstances.
The Discharge Order discharges the guardian and its surety (if the Guardian posted a bond) from liability for all matters encompassed in the Final Account Account/Report.
Step 6: Court Signs Discharge Order and Guardian Discharged
If all is satisfactory with the proposed Discharge Order, the Court will sign it. The Guardian should serve a copy of the entered Discharge Order with a Notice of Entry. My practice is to serve copies of the entered Order Settling Final Account/Report and Discharge Order with Notice of Entry, even if I am certain there are no disputes and no parties will appeal.
Discharging the guardian may seem overwhelming at first, but once you understand the steps, its easy to digest. For a detailed overview, I encourage you to watch my CLE course on LawLine.com, “Preparing Discharge Applications in NY Mental Hygiene Law Article 81 Proceedings”.