The Supreme Court revoked a Power of Attorney in which the AIP, while competent, had designated her adult daughter to serve as attorney-in-fact, due to the daughter’s self-dealing and breach of her fiduciary duty, but declined to revoke the Health Care Proxy in which the AIP designated her daughter to also serve as her health care agent, due to the petitioner-son’s failure to prove that his sister was unavailable or unwilling to act, or that her actions or inactions rose to the level of incompetence or bad faith.
However, due to the fighting between the AIP’s children, the Court declined to appoint the petitioner-son, and instead appointed an independent third-party, to serve as full guardian of the IP’s property, and limited guardian of her person. Matter of Walter K.H. 31 Misc.3d 1233A, 2011 N.Y. Misc. LEXIS 2531 (Sup. Ct., Erie Cty)
George J. Ferrara, single with no children, was retired and living in Florida. He was estranged from his immediate family. He executed a Will in June of 1999 specifically making no provision for any family member, leaving his entire estate to the Salvation Army. He was hospitalized in December of 1999.
His nephew then moved him to a New York assisted-living facility. George signed a power of attorney on January 25, 2000, appointing his brother and nephew as agents.
A typewritten provision was added to the preprinted form which authorized the agents to make unlimited gifts to his nephew and brother. An attorney who was acquainted with the nephew was present at the signing of the power of attorney.
However, she only acted as notary and was not counsel to either George or his nephew. The nephew transferred $820,000 of George’s assets to himself, which was virtually all of George’s assets.
George died on February 12, 2000, less than a month after moving to New York and approximately three weeks after signing the power of attorney.
The Salvation Army commenced proceedings in Surrogate’s Court to recover $820,000.
The New York General Obligations Law provides that a gift may be made to a power of attorney for purposes which the agent reasonably deems to be in the best interest of the principal. This specifically includes minimization of income, estate, inheritance, generation-skipping, transfer or gift taxes.
The New York Court of Appeals held that the New York legislature sought to empower individuals to appoint an agent to make annual gifts consistent with the financial, estate or tax planning techniques and objectives, not to create gift-giving authority generally and certainly not to supplant a Will.
Noting that the gift-giving virtually impoverished George, the court held that his best interest did not include “such unqualified generosity”. Therefore, the Salvation Army was entitled to the $820,000.
