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Powers of Attorney – Gifts and Loans to Friends and Relatives and Charitable Gifts

A little known, and little used, authority given to persons acting under a Power of Attorney is the authority given under sections 37 and 38 of the Substitute Decisions Act, to makes gifts or loans to the friends and relatives of the individual incapable of managing his or her own affairs. A person acting under a Power of Attorney for another may also make charitable gifts on behalf of the incapable individual.

The authority to make these gifts and loans is subject to certain conditions:

  1. They may only be made if there are otherwise sufficient other funds to:

(a) Cover the incapable individual’s support and care;

(b) Cover the support, educational costs and care of the incapable individual’s dependants; and

(c) Cover the incapable individual’s other legal obligations.

2. There is reason to believe, based on intentions the incapable individual expressed before becoming incapable, that he or she would have himself or herself made them if he or she was capable.

3. In the case of a charitable gift, either the power of attorney document itself authorizes the making of the charitable gift, or there is evidence that the incapable individual made similar gifts when he or she was capable.

Importantly, the Act goes on to direct that if a power of attorney contains instructions with respect to the making of gifts or loans to friends or relatives, or the making of charitable gifts, any such instructions shall be followed. So, if you wish your appointed attorney(s) under your Power of Attorney to make gifts or loans to relatives or friends, or charitable gifts, be sure to expressly state that and incorporate it in your Power of Attorney before you sign it. If you want to be sure that your wishes in this regard are followed, make sure that you explicitly state what your wishes are in your Power of Attorney.

An important caveat for a person acting under a power of attorney and contemplating making a gift or loan to an incapable individual’s relative or friend, or a charitable gift on his or her behalf. The Act stipulates that a gift or loan to a friend or relative, or a charitable gift, not be made if the incapable individual expresses a wish to the contrary.

Give this some thought before executing your Power of Attorney.

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