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Community College of Denver *
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Subject
Law
Date
Jan 9, 2024
Type
docx
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2
Uploaded by ChefLapwing6540
Issue:
What are the limitations for what a person may do under a power of attorney
in regard to gift transfers?
Rule
:
Matter of Ferrara
, 7 N.Y.3d 244, 852 N.E.2d 138, 819 N.Y.S.2d 215, 2006 N.Y.
LEXIS 1759, 2006 NY Slip Op 5156
a resident of Florida (“Ferrara”) executed
a will that contained no provisions for family members and left the entire
estate to charity. When Ferrara’s health started to decline, he created a
power of attorney that made his brother and nephew his attorneys. Ferrara’s
nephew proceeded to transfer $820,000 to himself stating he obtained
permission from Ferrera.
N.Y Gen. Oblig. Law 5-1501
allows a permitted attorney to give gifts to
family members with a cap of $10,000 a year.
Matter of Ramirez
, 2014 N.Y. Misc. LEXIS 3156, *6-7, 2014 NY Slip Op
31842(U), 6 the court opined the following,
“….. As the Court of Appeals has noted, the legislature, in including a gift-
giving power in the General Durable Power of Attorney, "sought to empower
individuals to appoint an attorney-in-fact to make annual gifts consistent with
financial, estate or tax planning techniques and objectives - not to create
gift-giving authority generally, and certainly not to supplant a will" (Matter of
Ferrara, 7 NY3d 244, 253, 852.”
Analysis:
NY Gen Oblig Law 5-1501 (1) allowed for gifts to family members but set a
limit of $10,000 per person per year. In the Matter of Ferrara, Ferrara signed
a durable power of attorney that removed the limit of $10,000 allowing the
power of attorney the authority to make gifts with no limit if the gifts were in
the best interest of the principal (Ferrara). In Ferrara, the Courts decided that
the gifts the nephew gave himself were not in the best interest of the
principal since the principal originally executed a will that left no assets to
Ferrara’s family but rather left everything to charity.
In the 1990s,
Legislature amended 5-1501(1) adding M, which authorized the attorney fact
to make gifts to the principal’s spouse, children, remote descendants and
parents not to exceed $10,000 in any year.
Conclusion:
The case and the case law created from New York, Matter of Ferrara, 7 N.Y.3d
244 (2006) would not apply in this scenario as long as any transfers were in
the principal's (Marjorie) best interests. The limit is removed by ensuring that
all transfers made are in Marjorie's best interest; therefore, Sawyer can
transfer assets to Marjorie's children under the power of attorney with no
limit.
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