## Facts

- George J. Ferrara, a retired stockbroker living in Florida, executed a 1999 will expressly disinheriting family and leaving the residuary estate to the Salvation Army; a later codicil reaffirmed that plan.
- After Ferrara was hospitalized in late 1999, his nephew, Dominick Ferrara, obtained powers of attorney to manage Ferrara’s affairs.
- A New York statutory short-form power of attorney was executed with a typewritten rider expanding the agent’s gifting authority beyond the statutory limitation, authorizing gifts “without limitation,” including to the agent and the agent’s father.
- Using the power of attorney, Dominick transferred virtually all of Ferrara’s assets (about $820,000) to himself (and/or other family members) shortly before Ferrara’s death.
- The Salvation Army, as sole residuary beneficiary under the will, challenged the transfers as invalid self-dealing and sought return of the assets to the estate.
- The Appellate Division upheld the gifts; the Salvation Army appealed to New York’s highest court.

## Issues

1. Whether an agent acting under a New York statutory short-form power of attorney, augmented by language allowing unlimited self-gifts, may transfer essentially all of the principal’s assets to himself.
2. Whether such gifts are valid when they conflict with the principal’s recently executed, formally expressed estate plan.
3. What fiduciary standard governs an agent’s exercise of augmented gift-giving authority, and who bears the burden to justify self-dealing transactions.

## Decision

- The court reversed the Appellate Division and ruled for the Salvation Army.
- The court held that an agent exercising enhanced gift-giving authority under a statutory short-form power of attorney must act in the principal’s best interests.
- Dominick’s transfers of nearly the entire estate to himself were not in Ferrara’s best interests, particularly given Ferrara’s explicit and recently confirmed intent to leave his residuary estate to charity and exclude family.
- The challenged gifts were invalid, and the transferred assets belonged in the estate.

## Legal Principles

- An agent under a statutory short-form power of attorney is a fiduciary and must act loyally for the principal’s benefit.
- Additional language expanding statutory gifting authority, including authorization of self-gifts, does not eliminate fiduciary limits; gifts must be made in the principal’s best interests.
- Self-dealing by an agent triggers heightened scrutiny, and the agent bears the burden of showing the transaction was proper and free from undue influence or overreaching.
- The principal’s formally expressed estate plan is strong evidence of the principal’s interests and is relevant in evaluating whether power-of-attorney gifts are permissible.

## Conclusion

The court invalidated sweeping self-gifts made under an augmented power of attorney because fiduciary duties persist despite broad gift language, and gifts that effectively rewrite a principal’s recent, explicit estate plan are not in the principal’s best interests.


In re Estate of Ferrara, 852 N.E.2d 138 (N.Y. 2006)