Mark Down is 74 years old and getting sick. He executed a Will that leaves all of his assets to his children; Mark also executed a power of attorney, giving his son,
Slowe, the power to handle all of his financial assets. Mark is getting sick and losing competency. Mark has $300,000 in a Brokerage account, which Slowe would like to transfer to his father’s children to try and remove Marks assets to allow him to be eligible for Medicaid benefits.

The issue presented is whether Slowe Down, under Power of Attorney, is able to transfer his father’s assets to his children.

In Matter of Ferrara, 7 N.Y.3d 244 (N.Y. 2006), the New York appellate court stated that an attorney in fact could make “gifts to the principal's spouse, children, and more remote descendants, and parents, not to exceed in the aggregate $ 10,000 to each of such persons in any year.” However, Matter of Ferrara also states that “such gifts may not exceed $ 10,000 unless the statutory short form power of attorney contains additional language…such gifts may not exceed $ 10,000 unless the statutory short form power of attorney contains additional language.” The case also went on to say that the gift-giving authority means that “the principal authorizes the agent to make gifts either outright or to a trust for the sole benefit of one or more of the specified persons only for purposes which the agent reasonably deems to be in the best interest of the principal, specifically including minimization of income, estate, inheritance, generation-skipping transfer, or gift taxes.”

In In re Estate of Rice, 8 Misc. 3d 1001A (N.Y. Sur. Ct. 2005) a New York Surrogate
Court stated that if “power of attorney executed by the decedent included only the statutory language for gift-giving authority, his agents were required to act in his best interests.”

In Matter of Ferrara it states that an attorney in fact can make gifts to the principal’s children, but cannot exceed a total of $10,000 per person, per year. In our case, our client wants to transfer his father’s assets to his father’s children.

In In re Estate of Rice it stated that if the power of attorney did not state whether the agent could transfer more than $10,000, it is required that the agents act in the best interest of the principal. As cited above in Matter of Ferrara minimization of income is considered to be in the best interest of the principal. This applies to our case in the fact that our client wants to remove his father’s assets so that he can become eligible for Medicaid.

In conclusion, the Matter of Ferrara case will not have a significant impact on our case. Since our client wishes to transfer his father’s assets to minimize his income which would be in his father’s best interest, there should be no limitation on his power of attorney.