Typically, the holder of a power of attorney may not make gifts to herself unless expressly authorized by the terms of the power of attorney.  In a recent case, In Re Estate of Cook, 472 P.3d 1179 (Mont. 2020), gifts by the decedent’s girlfriend using her boyfriend’s power of attorney that she had prepared for him were upheld, even though it gave her no express gifting powers.

As you may have guessed, there were extensive extenuating circumstances.  The boyfriend had been diagnosed with incurable cancer, and the couple had been together for about 17 years before his death.  The girlfriend had drafted the power of attorney and the boyfriend’s will and revocable trust based on her own documents, at the boyfriend’s request, and even though she was not a lawyer.  Notably, the girlfriend’s sister served as notary for the signing of the power of attorney.

The boyfriend directed the girlfriend to make the two gifts in question - cash of $30,000 to buy her a vehicle, and a $150,000 bank account that he instructed her to make joint.  

Also, the couple ultimately married the day before his death.  The Court found that the boyfriend had the legal capacity to enter into a valid marriage.  There was testimony from some of the decedent’s long-time friends that he was very independent about his finances.  At the end, he seemed anxious to complete his planning himself, and did not appear influenced by others in this regard.

While the decedent’s power of attorney did not expressly authorize the gifts, it did give his girlfriend general authority.  This general authority had to be exercised in a manner consistent with the principal’s objectives.  The Court found that the $30,000 gift for the vehicle had been authorized directly by the decedent.  As to the account transfer into joint name, the Court concluded that the decedent had retained partial ownership of the account and no gift had been immediately made.  Of course, the fact that the decedent had himself authorized this transfer too, could have been the basis for upholding the gift.

It’s recommended that powers of attorney expressly provide any gifting authority that the principal wants to confer, particularly if gifts to the power holder herself are desired.  Further, the power holder shouldn’t draft the power of attorney herself, particularly if not an attorney.  Nor should an immediate relative of an interested party serve as notary to the signing, although this issue was not raised at trial.  The gifts were ultimately upheld in this case notwithstanding the presence of these problems, but only after a lawsuit, trial and appeal.