## Facts

- In March 1970, Margaret Berry executed a power of attorney appointing her niece, Irene Montanye, as her agent for financial matters.
- On April 30, 1970, acting under the power of attorney, Montanye transferred money from Berry’s bank account into a Totten trust account in Berry’s name “in trust for” Anne Scully, Montanye’s mother.
- Berry died in June 1971.
- After Berry’s death, Scully served as administratrix of Berry’s estate.
- Berry’s other heirs filed a proceeding in Surrogate’s Court seeking to rescind the Totten trust, initially arguing that Montanye exceeded the authority granted by the power of attorney by creating a trust for Scully.
- During discovery, the heirs learned that Berry became comatose on April 29, 1970—one day before the transfer—and then moved to rescind the Totten trust on the additional ground that Berry’s mental incapacity had terminated the principal-agent relationship before Montanye acted.

## Issues

1. Whether the principal’s mental incapacity (a coma) terminated an ordinary power of attorney, so that the agent lacked authority to transfer the principal’s funds the next day.
2. Whether an attorney-in-fact, absent clear authorization, may use a power of attorney to create a Totten trust that benefits the agent’s close family member and shifts property away from the estate.

## Decision

- The court granted the heirs’ request to rescind the Totten trust.
- Berry’s mental incapacity terminated the agency relationship before the April 30 transfer.
- Because Montanye acted after the agency ended, she lacked authority to withdraw and retitle Berry’s funds into a Totten trust for Scully.
- The funds placed into the Totten trust were ordered returned to Berry’s estate for administration.

## Legal Principles

- An ordinary (non-durable) power of attorney is terminated by the principal’s mental incapacity, unless authority is lawfully made to continue despite incapacity.
- Acts taken by an attorney-in-fact after termination of the agency are unauthorized and ineffective to bind the principal or dispose of the principal’s property.
- An attorney-in-fact owes fiduciary duties and generally may not make gifts or estate-substitute transfers (including creating a Totten trust for another) without clear, specific authority.
- A transaction that benefits the agent or the agent’s family invites close review and will be set aside when the agent cannot show valid authority at the time of the transfer.

## Conclusion

In *In re Berry’s Estate*, the Surrogate’s Court set aside a Totten trust created by the decedent’s attorney-in-fact because the decedent became comatose the day before the transfer, which ended the non-durable power of attorney and left the agent without authority to retitle the decedent’s bank funds for the benefit of the agent’s mother; the court ordered the funds restored to the estate.


In re Berry's Estate, 329 N.Y.S.2d 915 (1972)