There is a very good chance that at some point in your life you will find yourself appointed to be the Agent under a power of attorney. As an Agent you have a number of duties and responsibilities, all of which are considered to be fiduciary in nature. As a fiduciary you are expected to use the utmost care with assets of the Principal and to invest funds prudently. All actions taken by a fiduciary must be taken with the best interest of the Principal in mind. Taking that into consideration, can you make gifts as an Agent? More specifically, can you make gifts to yourself as the agent of a power of attorney in Texas?
Generally speaking, a Principal (the person conferring the power granted in a power of attorney, or POA) may grant an Agent as much, or as little, power as the Principal wishes. If a general POA is executed the Agent will have almost unlimited power to act on behalf of the Principal in legal matters. If, however, the Principal only executed a limited, or special, POA the Agent will only have those powers specifically enumerated in the POA document. There are, however, some statutory limits to the power and authority that can be granted in a POA. Gifts made by an Agent fall into that category.
Under the Texas statutes relating to powers of attorney an Agent is not specifically granted the authority to make gifts. Because that authority is not granted by statute the law looks to common law. The general common law of agency dictates that an Agent does not have the right to gift assets or property owned by the Principal because the Agent is only to use those powers specifically given to him/her by the Principal and is always to act in the Principal’s best interest. If the power to make gifts in not enumerated in the POA document, therefore, the law must consider whether making gifts is in the Principal’s best interest. Giving away assets owned by the Principal is not, according to the law, in the Principal’s best interests. Therefore, unless the POA agreement specifically gives an Agent the authority to make gifts on behalf of the Principal he/she cannot do so under the laws of the State of Texas. Furthermore, if the POA document does give the Agent the authority to make gifts on behalf of the Principal it must clearly include gifts to the Agent for the Agent to be able to gifts assets to himself/herself in order to avoid the issue of self-dealing.
If the Principal is using the statutory “Durable Power of Attorney” form approved in Texas, there is a box that must be checked if the Principal wishes to give the Agent gifting authority. As you can see, although the power to make gifts is granted, the power is also limited to the annual exclusion amount for federal gift tax purposes. The language used in the form is as follows:
“_________ I grant my agent (attorney in fact) the power to apply my property to make gifts, except that the amount of the gift to an individual may not exceed the amount of annual exclusions allowed from the federal gift tax for the calendar year of the gifts”.
If you have additional questions or concerns about a Texas power of attorney, contact the experienced Texas estate planning attorneys at The Mendel Law Firm, L.P. by calling 281-759-3213 to schedule your appointment today.
Stephen A. Mendel, Estate Planning Attorney
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