DELGALLO.com WEALTH MANAGEMENT ESSENTIALS –Gifting by a Power of Attorney
By LEONARD J. DEL GALLO JR., M.S., MPASsm, CFP®
(www.DELGALLO.COM) Del
Gallo Financial Services, LLC
There have
been numerous court cases that have litigated the validity of gifts by the
attorney-in-fact if the expressed power to gift was not stated within the
durable power of attorney form; Estate of Casey v. Commissioner, Townsend v.
United States, Estate of their state. The courts decided that the principal had
the intention of including the power to make gifts to the attorney-in-fact and
therefore those gifts would not be included within Mrs. Pruitt’s estate under
Section 2038 (Estate Neff v. Commissioner, Burnet v. Hamel, and Estate of
Stinchcomb v. Stinchcomb. Some of these cases determined that the
attorney-in-fact could make gifts without express written permission within the
durable power of attorney form, while other cases determined the
attorney-in-fact was not authorized to make the gifts according to of Suzanne
C. Pruitt). Each State may or may not have current legislation addressing the
validity of gifts made by the attorney-in-fact if gift making authority is not
implied within the durable power of attorney form and the issue can lead to
litigation with unknown consequences. If the state has not addressed the issue
by passing laws or statutes then the attorney creating the durable power of
attorney for a client should not assume that the durable power of attorney form
will allow the attorney-in-fact to execute gifts unless it is specifically
stated within the estate planning documents and durable power of attorney form.
If the principal does not want to include gifting privileges to the
attorney-in-fact then the estate documents and durable power of attorney form
should state clearly that the principal does not want to include gifting
privileges and the attorney-in-fact should be prohibited from this action in
all the estate documents. Clients and their attorney should make sure their
intentions are clearly written within their legal documents to avoid negative
tax implications and unnecessary litigation.
Any
questions please contact Del Gallo Financial Services, LLC by visiting our
website at https://delgallo.com/. Del Gallo Financial Services, LLC can arrange an
educational seminar or workshop for your organization’s members and/or
employees. This research commentary is intended to educate families so
they may gain an introduction to a difficult planning topic and is not intended
for any other purpose. Articles created by Len Del Gallo Jr., may
not be copied or used without written permission from Len Del Gallo Jr.
Please note that some information may be protected by copyright laws. Del Gallo
Financial Services, LLC and its’ representatives do not provide tax or legal
advice. Please consult your tax advisor or attorney for guidance on such
matters and before implementing any strategies and/or updates to your
planning. Del Gallo Financial Services, LLC is a Registered Investment Advisor
and Licensed Insurance Agency.
Works
Cited
Madden,
Robert. “Tax Planning for the Highly Compensated.” Sections 1.01, 1.02, 1.03,
2.01, 2.02, 2.03, 2.04, 2.05,
3.01, 3.02, 3.04, 3.07, 3.08, 4.01, 4.03. 2011. Estate
Planning Library of RIA
Checkpoint.Thompson Reuters. Web. 23 Aug. 2012.
Madden,
Robert. “Tax Planning for the Highly Compensated.” Sections 5.01, 5.02, 5.03,
5.04, 5.05, 5.06. 2011. Estate Planning
Library of RIA Checkpoint. Thompson
Reuters. Web.23 Aug. 2012.
Madden,
Robert. “Tax Planning for the Highly Compensated.” Sections 6.01, 6.02, 6.03,
6.04, 7.05, 8.02, 10.02,10.03,
10.04, 10.05, 10.06, 11.02, 11.10. 13.02. 2011. Estate
Planning
Library of RIA Checkpoint.Thompson Reuters. Web. 23 Aug. 2012.
Madden,
Robert. “Tax Planning for the Highly Compensated.” Part III Estate Planning.
Chapter 3,
10 & 13.Overview of Taxation of Wealth Transfers. Section 10.08.
Power of
Attorney. Estate Planning Library of RIA Checkpoint. Thompson
Reuters.
N.d. Web. 14 Nov. 2012.
Leonard J. Del Gallo Jr., Broker Associate in Connecticut & Florida
CT Managing Broker: Berkshire Hathaway HomeServices N.E. Properties
www.bhhsneproperties.com
Office: 172 West Main Street
Avon, Ct. 06001
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