Gifts Made under Power of Attorney Were Valid
Wagenbrenner, Anne, Journal of Accountancy
A common estate planning technique is to make yearly gifts to take advantage of the $10,000-per-year, per-donee gift tax exclusion. In two recent cases involving powers of attorney, what the parties thought were completed gifts ended up in court.
The first case involved a father who gave his son a power of attorney authorizing him to make gifts of the father's property to various heirs (see JofA, Dec. 94, page 30). Gifts of $10,000 each were made under the power of attorney in two succeeding years. Because the first year's gift checks were cashed close to year-end, they did not clear until the next year, leading to a dispute with the Internal Revenue Service about the year in which the gifts were completed--and whether they were covered by the $10,000 exclusion. The taxpayer won that dispute. See Metzger Est. (4th Cir., 1994).
In a second case, Joseph Ridenour gave his son James power of attorney to be used if Joseph became incapacitated. The power listed specific acts James could perform and contained a general grant of authority to perform "all and every act. …