Powers of attorney and Gifts
By: Martin M. Shenkman, CPA, MBA, JD
Gift Provision Under a Power of Attorney
Money Matters Radio – Estate Planning Checklist
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Introduction/Overview: Almost all form powers of attorney include the power to make gifts. Should they? What is it you really want? How do the recent tax changes affect your desire to make gifts? You need to tailor the provision do accomplish YOUR goals. Forms can be very dangerous.
Consider the following items?
√ No Gifts No gifts should be made without a budget and financial plan. If your plan shows you have a close call financially state in your power that no gifts should be made. Deleting a gift provision or ignoring the issue is not the same as an affirmative statement that no gifts should be made.
√ Will you pay an estate tax? The real personal goals of the clients need to be addressed and few powers have done that. With the estate tax exclusion of $3.5 million in 2009 only approximately 6,000 decedents will have estate tax returns filed. That is a miniscule percentage. Consider the following:
√ Is State Estate Tax Enough to Justify a Gift? My agent shall only be authorized and permitted to make gifts if my estate has a reasonable likelihood of being subject to a federal estate tax.
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√ Gifts Not Jeopardizing Spouse’s Security: “My agent shall be authorized and permitted to make gifts regardless of whether or not my estate has a reasonable likelihood of being subject to either a state or a federal estate tax, so long as personal goals of reasonably assisting my heirs is achieved. The use of federal gift tax law parameters in establishing annual gifts is merely for guidance and if those limitations are significantly modified or eliminated the Agent may make gifts in any reasonable amount.
√ Medicaid Planning: Should you authorize your agent to give away everything? Then your power is more “powerful” then your will!
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