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Powers of Attorney and Gifting

On Behalf of | Nov 2, 2014 | Powers of Attorney | 0 comments

Powers of Attorney may contain authority for the Agent to make gifts of the Principal’s assets.  The type of authority to make gifts, whether it is limited or unlimited, or even if the Agent should have any such authority, should be discussed with a certified elder law attorney and then written carefully in the Power of Attorney.

Powers of Attorney which state that the Agent has the power “to make limited gifts” or “to make gifts” means that the Agent may make gifts up to the annual federal tax exclusion gift limit, right now up to $14,000.00 per person per year, to the Principal’s spouse, issue (children or grandchildren) or spouses of issue (like a daughter-in-law or a son-in-law). This type of language is fairly common, but is not helpful to allow gifts to nieces or nephews, brothers or sisters or even charities.  If the Principal is single and/or has no living spouse or children, the Principal has to be sure that the attorney carefully drafts the gifting provision to permit limited gifting to the appropriate parties.

Powers of Attorney which state that the Agent has the authority “to make unlimited gifts” mean that the Agent has the broadest authority to make gifts on the Principal’s behalf, expressing the Principal’s desire that the Agent make gifts and other transfers which, in the Agent’s sole discretion, may limit death taxes, estate recovery and/or estate administration expenses, and/or nursing home and/or other health care related expenses, and/or which may help qualify the Principal for public or private benefits, including, but not limited to, Medical Assistance (Medicaid), SSI or any other public, private or charitable benefits. 

Powers of Attorney may include no language about gifting, which mean that the Agent may not make gifts on behalf of the Principal. The Principal’s decision about the power to make gifts – whether none, limited or unlimited – can be very important and should be made carefully. Do not just use boilerplate language, which may not fit you or your family situation.