Cruz Failed to Create an Effective Trust.
Acting upon the advice of Bronx Legal Services, Cruz attempted
to shelter her Zebley award through an UGMA trust account, as
governed by the New York Estates, Powers and Trusts Law ("EPTL"),
§§ 7-4.1 to 7-4.11.*fn3 However, Cruz has failed to create an
effective trust because the corpus of the trust was not a valid
gift under New York law.
Under New York law, the first requirement for an UGMA trust is
that the corpus of the trust be a gift from an adult to a minor.
See EPTL § 7-4.1; Sussman v. Sussman, 47 N.Y.2d 849, 850,
418 N.Y.S.2d 768, 392 N.E.2d 881 (1979); Gordon v. Gordon,
70 A.D.2d 86, 419 N.Y.S.2d 684, 687 (App. Div.2d Dept. 1979), aff'd
52 N.Y.2d 773, 436 N.Y.S.2d 621, 417 N.E.2d 1009 (1980). It is
clear that the funds deposited in Cruz's UGMA trust were not a
gift to Cruz; the Zebley lump-sum payment at all times belonged
to Cruz as the disabled minor entitled to receive the SSI
benefits. Thus, Ortiz could not have made a gift of these funds
to her daughter, nor could Cruz have made a gift of the funds to
herself. Because Cruz's attempted UGMA trust is not effective
under New York law, the funds therein have remained at all times
under her control and thus must be treated as a countable
resource by the Commissioner.
The Commissioner Is Not Estopped from Finding Cruz Ineligible
In the alternative, Cruz argues that the Commissioner is
estopped from finding that her UGMA trust is a countable
resource. Cruz asserts that SSA publications upon which she
allegedly relied made misleading statements about the suitability
of using an UGMA trust to shield Zebley payments, and she
further argues that the SSA failed to respond to Cruz's alleged
request for advice on whether an UGMA trust would be effective.
Cruz claims to have relied on information provided in three SSA
publications: the pamphlet included with her original notice, the
November 1992 edition of the SSA newsletter, "The Social Security
Courier," and the SSA's Program Operations Manual System, an
instructional manual for SSA employees. However, no section of
any of these publications recommends or even suggests that an
UGMA trust will be effective to shield retroactive benefit
payments. Therefore, Cruz could not have been misled by these
Furthermore, even if an SSA publication had in error
recommended use of an UGMA trust, any such mistaken advice by the
SSA could not be the basis for an estoppel. It is well
established that the Government is held to a different standard
than private entities and will be estopped only where the
Government engaged in affirmative misconduct. See City of New
York v. Shalala, 34 F.3d 1161, 1168 (2d Cir. 1994). A plaintiff
must establish more than mere negligence or that an agency
mistakenly gave incorrect advice. See Azizi v. Thornburgh,
908 F.2d 1130, 1136 (2d Cir. 1990). Thus, any mistaken advice
regarding the creation of an UGMA trust could not in itself
constitute the affirmative misconduct necessary to estop the SSA.
See Schweiker v. Hansen, 450 U.S. 785, 788-89, 101 S.Ct. 1468,
67 L.Ed.2d 685 (1981); Scime v. Bowen, 822 F.2d 7, 9 (2d Cir.
Although there is no evidence in the Record to support her
claim, Cruz also claims that Ortiz sought advice from her local
SSA office regarding her use of an UGMA trust to shield her
daughter's Zebley award. She argues that, because the SSA
allegedly never responded to her request, the SSA should be
estopped from finding her financially ineligible. However, as the
cases cited above clearly establish,
the SSA could not now be estopped even if an employee of the SSA
had responded to her request and assured Cruz that an UGMA trust
would be effective. See Schweiker, 450 U.S. at 788-89, 101
S.Ct. 1468; Scime, 822 F.2d at 9. Thus, clearly the SSA's
failure to respond cannot now estop the Commissioner from finding
For the reasons set forth above, the Court denies Cruz's motion
for judgment on the pleadings and grants the Commissioner's
cross-motion for judgment on the pleadings. The Clerk of Court is
directed to enter Judgment accordingly and to close this action.
It is SO ORDERED.