Not surprisingly, I am not a big fan of fill-in-the-blank estate planning documents that you can get online or from an office store. There are many reasons for that, but one big reason is that online forms for a durable power of attorney (POA) often do not offer a "gifting" provision. Or they do offer such a provision but there is no advisor involved to explain the benefits (or occassional pitfalls) of including such a provision in your POA.
The take-home lesson for today is this: An agent under a POA cannot gift assets on your behalf without express authorization to do so in the POA document.
At first glance, this may not seem like a big deal. But it certainly becomes a big deal if/when transferring assets out of your name for Medicaid or tax purposes becomes highly advisable.
In the context of a Medicaid application, the State of Connecticut will most likely pretend that such a gift (made by a POA agent without authorization) didn't happen and treat the gifted asset as an "available asset" for the Medicaid applicant.
For real estate title purposes, if a POA agent transfers property without express authorization in the POA document then title to the property has not been effectively transferred.
These are just two examples of big problems that can occer when your POA document does not have adequate gifting language.
It is also worth mentioning that if you want your agent to have authority to make gifts to himself/herself, which is often the case when a spouse or trusted child is the agent, then that should be specifically spelled out in the document.
Of course, having said all of that, there can be good reasons to not include gifting powers in a POA, depending on the circumstances. The point is that this particular POA issue should be discussed thoroughly with your attorney.
DISCLAIMER: This blog does not offer legal advice, nor does it create an attorney-client relationship. If you need legal advice, consult with a lawyer instead of a blog.
