On appeal from the Superior Court of New Jersey, Chancery Division-Probate Part, Essex County, 14-991-Y.
Before Judges King, Coburn and Axelrad.
The opinion of the court was delivered by: Axelrad, J.T.C. (temporarily assigned).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
This is an appeal by Summit Bank (Summit), co-trustee of the revocable trust of Ruth Chandler, an incompetent, of the judge's order authorizing the Office of the Public Guardian for Elderly Adults (Public Guardian) to revoke the trust created by Chandler.
On February 21, 1997 Ruth Chandler, as grantor, created a revocable living trust for her own benefit with Summit as trustee. There was an ongoing relationship between Summit and Ruth Chandler, as shown by her naming the bank as sole executor under her 1993 will. Ruth Chandler was age seventy-three and had virtually no family. She funded the trust with all of her marketable securities, then valued at about $1.7 million.
Three months later, Ruth Chandler revoked the trust and established a substantially similar one with her friends Charles M. Menagh and Earl Tiffany as trustees. Ruth Chandler expressly provided in the trust agreement for the management of the trust property in the event of her subsequent incapacity. The trust would continue and the trustee would be authorized to make such direct payments "as the Trustee may deem proper to provide for [her] maintenance, support, and comfort in accordance with the standard of living enjoyed by [her] prior to [her] incapacity." Upon her death, the trustee would distribute the remainder of the trust estate to the personal representative of her estate as a part of her estate.
Summit filed a complaint for advice and direction regarding the validity and legal effect of the May revocation. Pursuant to a settlement agreement, on July 9, 1997, with the advice of her personal attorney, Ruth Chandler executed an amendment to the trust, which revoked the designation of Earl Tiffany as co-trustee and designated Summit as corporate co-trustee, and ratified all other terms of the trust. Summit and Menagh administered Ruth Chandler's trust as co-trustees from 1997 to August 1999. In oral argument we were advised that during the pendency of the appeal, Menagh passed away. The present market value of the trust exceeds $2.4 million.
In late 1998 Ruth Chandler's mental and physical condition began to seriously decline. This action commenced with the filing of a verified complaint by Adult Protective Services Program of Senior Services and an order to show cause, resulting from a referral from Summit personnel, seeking adjudication of Ruth Chandler as an incapacitated person, and the appointment of a guardian on her behalf. On December 1, 1998 the judge appointed Catherine B. Liu (Liu) as counsel for Ruth Chandler.
Several interested persons sought appointment as Ruth Chandler's guardian, including Paul Goodman, longtime friend and neighbor; Melanie Menagh, the daughter of Charles Menagh who was a co-trustee and friend; Summit; and the Public Guardian.
After investigating Ruth Chandler's situation and interviewing the various persons interested in becoming Chandler's guardian, on February 18, 1999, Liu submitted a report which recommended that Summit be appointed guardian of Ruth Chandler's person and property. Her report concluded:
The New Jersey Public Guardian is the guardian of last resort. In this matter, I respectfully submit that as Summit Bank is willing and able to perform all of the duties of a guardian for Ms. Chandler, that it is not necessary to resort to the Office of the Public Guardian. Furthermore, due to the long-standing relationship between Ms. Chandler and Summit Bank, Summit Bank would be able to provide a personal and familiar relationship with Ms. Chandler which the Public Guardian could not. Therefore, although the Public Guardian may be able to administer Ms. Chandler's Trust with a minimum of costs, given the fact that Summit Bank has established a five (5) year relationship with Ms. Chandler, which was of Ms. Chandler's own initiation, it appears it would be in Ms. Chandler's best interests to maintain such a personal relationship. As to the possible issue of the Public Guardian expending less of Ms. Chandler's funds for services as her guardian, I respectfully submit that since Ms. Chandler is in possession of a sizable estate and further since Summit Bank has had a five (5) year personal relationship with Ms. Chandler, the benefits of appointing Summit Bank [as] Ms. Chandler's guardian outweigh any additional costs.
The judge conducted a hearing on February 25, 1999, and heard testimony from several witnesses regarding Ruth Chandler's physical and mental condition. Public Advocate Christine O'Donnell testified as to the structure of her office and her professional staff of social workers, staff attorneys, a trust services unit headed by a former trust officer of a bank, and accountants. The Public Guardian opposed Summit's appointment on the basis that Summit was not as qualified as the Public Guardian in the provision of adult protective services. In response to the inquiry by the judge that, "given the existence of that trust, would [her] office accept the responsibility of being guardian of her person and not her property," Ms. O'Donnell stated, "I would have to decline that responsibility . . . . We have had some problems with guardianships of the person . . . ."
The judge and the Public Advocate then discussed the potential status of the trust if her office were appointed as guardian of Ruth Chandler's person and property. In response to the judge's question as to whether the trust should "continue or should [he] order it terminated and the assets turned over to [her] office," Ms. O'Donnell stated that she could not give the judge a definitive answer but would take into consideration Ruth Chandler's intent to create such trust and use it to provide for her ...