A Power of Attorney’s Power to Make Gifts

Posted on June 1, 2023 in Wills & Estate Planning by Jessi Brockman

An enduring property power of attorney (POA) is the written legal authorization in which a person known as the “grantor” designates a person known as the “attorney” to make decisions about the grantor’s property and finances. Essentially, a POA allows the attorney to step into the shoes of the grantor for the purpose of making decisions and transactions on the grantor’s behalf. Unless the grantor provides otherwise, the POA document is effective immediately upon the signing of the POA. An enduring POA endures past the point that the grantor loses capacity to handle their own property and financial matters. 

Unless the POA restricts the powers of the attorney, the attorney has the power to, for example, open and close bank accounts, deal with investments, collect debts, pay bills, buy goods and services, and maintain or sell a house or vehicle on the grantor’s behalf.

From time to time, an attorney will reach out to our firm and ask whether they, in their role as attorney, have the power to make a gift of the grantor’s property (such as cash) to family, to friends, to themself or to charity. Like many things in law, the answer is: it depends.  

Passing control of a grantor’s property to an attorney does not mean that the attorney owns the property. Rather, ownership remains with the grantor. An attorney is a fiduciary for the grantor, and therefore must act in the grantor’s best interest. Gifting the grantor’s property reduces the grantor’s asset base and is therefore arguably contrary to the fundamental duty to act in the grantor’s best interests. However, in most provinces, including Saskatchewan, the grantor may nevertheless be able to make gifts of the grantor’s property.

The starting point to answer the question of whether an attorney may make a gift of the grantor’s property is the provincial legislation where the grantor lives. In Saskatchewan, we have The Powers of Attorney Act, 2002 (the “Act”). Under the Act, unless the POA document specifically permits the making of gifts, the attorney cannot make a gift of the grantor’s property except as set out in the Act. Therefore, we need to analyze two things to determine the attorney’s power to make gifts of the grantor’s property: (1) the POA document in and of itself (Does the written POA specifically grant the attorney power to make gifts? If so, are there any limitations or conditions on that power?); and (2) if the POA document does not expressly grant the attorney power to make gifts of the grantor’s property, does the Act nevertheless permit the attorney to make gifts?

The Act sets out certain parameters as to when an attorney may make a gift of the grantor’s property. Subject to any limitations or conditions in the POA document, an attorney may make a gift of the grantor’s property if:

  1. the portion of the grantor’s property that constitutes the gift is not required to meet the grantor’s needs or the needs of the grantor’s spouse or dependents;

  2. the attorney has reasonable grounds to believe, based on the actions of the grantor while the grantor had capacity, that the grantor would make the gift if the grantor had capacity; and

  3. the total value of all gifts made in a year does not exceed $1,000.00.

Furthermore, an attorney cannot make a gift to themself without the authorization of the court. The court may also authorize an attorney to make a gift that is not otherwise authorized under the Act if the court is satisfied that it would be appropriate for the attorney to make the gift.

The attorney should proceed cautiously when contemplating making a gift of the grantor’s property to avoid breaching their duty to act in the best interests of the grantor. A failure to review the POA document and applicable provincial legislation could result in liability for the attorney. If you are acting in the role of attorney and have been struggling with the question of whether you may make a gift of the grantor’s property, I encourage you to seek legal advice. At the very minimum, you should be reviewing the POA document and the applicable provincial legislation before you make a gift of the grantor’s property.     

Jessica Brockman
500-123 2nd Avenue S, Saskatoon, SK S7K 7E6
Telephone: 306-244-0132
Email: jbrockman@shtb-law.com

This article is provided for general informational purposes only and does not constitute legal or other professional advice.

This article was originally published in The Western Producer on October 13, 2022.