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An over 21 mentally challenged person who was certified to receive Supplemental Security Income (SSI) at the age of 18 elects a "Payee" who happens to be a parent. For several years the parent manages the funds and utilizes them for the upkeep, clothing, medical, food etc; for the challenged person. Years later the parents file for divorce and the child elects to switch payee roles to the other parent that they will reside with.

The parent who currently is the payee sues the other parent citing mis-use of the funds and submits an amount to the court that the needs to be payed to the current parent managing the funds.

Notes: The person is over 21, neither parent has legal guardianship nor does any state or federal agency. The person is legally emancipated by virtue of being over 21.

What, if any, legal cause in NY does a person who is not a legal recognized representative, guardian, power of attorney, not legally incompetent or incapacitated.

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It turns out that this seemingly pretty simple question is actually quite involved and has multiple subcomponents at a level of complexity similar to a difficult bar exam question.

I am providing my best good faith analysis of how these questions should be resolved, but more than one of them is legitimately debatable and one could non-frivolously argue for a different interpretation of some of these points.

The Court with jurisdiction over divorces in New York State is the New York State Supreme Court (trial division) (not, contrary to all common sense, the New York State Family Court, which has no jurisdiction over anything discussed in this question).

The New York State Supreme Court (trial division) is New York State's court of general jurisdiction. The intermediate appellate court in New York State is the appellate division of the New York State Supreme Court, and the next level of appeal is to the New York State Court of Appeals which is what most states would call a "supreme court". New York State also has courts of limited jurisdiction called Surrogate's Courts that handle many kinds of cases mostly involving probate and guardianship, which is roughly co-equal to the New York State Supreme Court (trial division) in the areas where it does have jurisdiction.

Implicit in this question are three subquestions with some subparts to those:

  1. Is some or all of this claim a matter properly raised in the context of a divorce case? Can a new claim related to recovery of funds be joined to the divorce action?

  2. Does the New York State Supreme Court have subject matter jurisdiction over this claim? If not, which courts do?

  3. Who has standing to bring this claim (i.e. who is legally allowed to sue over this question)? (Standing is considered a subpart of subject matter jurisdiction for some purposes, but for this purpose it is best to think of it as something separate.)

Notes: The person is over 21, neither parent has legal guardianship nor does any state or federal agency. The person is legally emancipated by virtue of being over 21.

In order for this arrangement to happen, the federal Social Security Administration must have made, at least, an administrative determination that there is some form of incapacity present, and the SSI qualification likewise probably involved such a determination. So, this premise in the question is problematic.

The parent who currently is the payee sues the other parent citing mis-use of the funds and submits an amount to the court that the needs to be payed to the current parent managing the funds.

The decision of who the funds are paid to would be handled by the United States Social Security Administration over which New York State courts do not have jurisdiction. It is conceivable, that if there has been a switch of payee with the Social Security Administration, that a divorce court could order the turnover of unspent SSI proceeds currently in the possession of the former payee to the current payee as part of the property division in the divorce.

But, neither parent would have standing, in their own right, to sue for breach of fiduciary duty by the payee parent who received the funds and failed to use them for the benefit of their child, and that claim could not be joined to the divorce case in the New York State Supreme Court (trial division).

Standing would be in the child, although the other parent could initiate a lawsuit as the "next friend" of the child and could seek to be appointed as a guardian, conservator, or guardian ad litem of the child in order to pursue the litigation on behalf of the child. Recognition of "next friend" status, and possibly even appointment of a guardian ad litem (i.e. for purposes of a lawsuit) might be handled by the court handling the primary case. Appointment as a guardian or conservator for the child would be a question for the New York State Surrogate's Court.

In any of these scenarios, the parent would be involved only in some fiduciary capacity and not as the true plaintiff in a breach of fiduciary duty lawsuit to recover funds previously misappropriated by a payee parent.

It isn't entirely clear to me (without significant case law research that might be inconclusive which I have not undertaken), whether the New York State Supreme Court (trial division) or the New York State Surrogate's Court would have jurisdiction over the breach of fiduciary duty claim against the payee parent (it could be that both courts have jurisdiction over that claim and the court in which the claim is first filed would assert authority over the case), although that claim to recover funds misspent in the past could not be joined to the divorce case.

It would also probably be possible to bring suit in the relevant U.S. District Court (or to remove the case to this federal court if it was initially brought in state court) since this involves funds paid pursuant to a federal government program by a federal agency pursuant to federal law authorization. Again, a parent would not have standing to bring suit in their own light, but the federal court could conceivably recognize the parent as a "next friend" or appoint the parent as a guardian ad litem for the adult child. Or, a parent could be appointed by the New York State Surrogate's Court as guardian and/or conservator for the child, and then bring suit in that capacity for the child in federal court.

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    Thank you for the thought out response, appreciate it.
    – nroneson
    Apr 29, 2022 at 14:13

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