If your loved one prepared an estate plan that involves a power of attorney, you may find yourself appointed the agent or attorney-in-fact under that instrument. As a result, you have the authority to act on your loved one’s behalf for nearly all purposes. Furthermore, your authority to act may include making gifts of your loved one’s assets. Your loved one is referred to as the “principal” under the document. In some cases, this authority kicks in only when the principal is deemed incapacitated. In other cases, the authority is granted immediately upon execution of the document.
Five Steps to Take Before Gifting Under a Power of Attorney
Are you an appointed an agent or attorney-in-fact under a loved one’s power of attorney? Do you want to make gifts of the principal’s assets? If so, it is important to take the following steps:
- Consult with an experienced attorney before taking action. Your attorney will help you review the terms of the power of attorney as well as evaluate whether gifting of assets is beneficial for the principal.
- Carefully review the terms of the power of attorney. These documents can be drafted to give the agent or attorney-in-fact the power to continue making annual gifts as part of an overall estate plan. If the power is not expressly given, however, you may not have the necessary authority to make gifts on behalf of the principal.
- Determine whether the ability or power to make gifts is contingent upon your loved one being deemed incapacitated.
- If so, review whether the power of attorney itself dictates how incapacity is determined.
- If all of the necessary authority is granted for you to make gifts, ensure that you are working with an experienced attorney as well as a tax advisor in order to be certain that the action you are about to take is in the best interest of the principal’s overall estate plan and consistent with his estate planning goals.
Carrying out the administration of an estate is not an easy process if you have no prior experience. We encourage you to get started by reviewing our free guide, Understand What to Expect During a California Estate Administration.
- Disputes Over the Use of a Power of Attorney
- Determining Mental Incompetence
- Evidence of Mental Incompetence