Gifting or Donating as an Attorney for Property*

A Power of Attorney for Property (POA) is a legal document that authorizes one or more individuals, known as the attorney(s), to manage the financial and legal affairs of the person granting the power, referred to as the grantor or principal. Across Canada, the POA is an essential tool for individuals who may become incapable of managing their financial affairs. While attorneys have significant authority to handle the grantor’s finances, their ability to make gifts or donations on the grantor’s behalf is subject to restrictions under provincial and territorial legislation. Using Ontario’s Substitute Decisions Act, 1992 (SDA) as an example, this article explores the general principles governing gifting and donating via a POA in Canada.

Authority to Make Gifts and Donations

In Canada, an attorney for property does not have an unrestricted right to make gifts or donations on behalf of the grantor. Provincial legislation may expressly limit what an attorney can gift or donate to ensure that these actions align with the grantor’s best interests, particularly if the grantor is incapable. For example, under Ontario’s Substitute Decisions Act, 1992 (the “SDA”), section 37(3), an attorney may make gifts or loans to the grantor’s friends and relatives and may also make charitable donations, subject to specific conditions outlined in section 37(4). These restrictions are in place to protect the grantor’s financial security and to ensure that their property is not depleted inappropriately.

While there may be some variation between provinces, the general principles governing whether and how much an attorney may gift or donate are as follows:

• Sufficiency of Assets: Gifts or donations may only be made if the grantor’s property is sufficient, and willremain sufficient, to cover necessary expenses, such as care, living costs, support for dependants, and otherlegal obligations. Any gift or donation must not jeopardize the grantor’s ability to meet their own needs.
• Grantor’s Intentions: Gifts or loans to friends or relatives are generally permitted only if there is reason tobelieve, based on the grantor’s expressed intentions before becoming incapable, that they would have madesuch gifts if capable. Similarly, charitable donations may be allowed if consistent with the grantor’s pastpractices or explicitly authorized in the POA document.
• Express Authorization: Some provinces require that the POA document explicitly authorize the attorney to make gifts or donations. Even with such authorization, the gifts or donations must be reasonable in proportion to the grantor’s assets and circumstances.
• Contrary Wishes: A gift or donation cannot be made if the grantor expresses a wish to the contrary, either before or after becoming incapable.
• Limits: Provincial legislation may impose limits on the amount or value of gifts or charitable donations. For example, in Ontario, the total value of charitable gifts must not exceed the lesser of 20% of the income of the property in the year the gifts are made or the maximum amount specified in the POA.

Considerations for Grantors and Attorneys

When preparing a POA for Property, grantors should consider whether they want their attorney to continue specific gifting or donating practices, such as annual charitable donations or gifts to family members for special occasions. These preferences can be explicitly outlined in the POA document to provide clear guidance to the attorney.

Attorneys must understand the scope of their authority under the applicable laws and the specific terms of the POA document. They should exercise caution to ensure that any gifts or donations do not compromise the grantor’s financial security or conflict with their expressed wishes.

Attorneys should be encouraged to seek legal, financial, and tax advice as appropriate to make sure that they are acting within their authority and in the donor’s best interests. Similarly, it is critical to work with a trusted legal expert when preparing a POA for property. A legal professional can help ensure that the POA document reflects the grantor’s intentions and complies with the relevant legislation in their jurisdiction.

For more information, consult your Financial Advisor or contact our Estate & Trusts Solutions Team to explore the best strategies for your estate planning needs.

* “Protection Mandate” or “Mandate in Case of Incapacity” in Quebec

Solus Trust Company (“STC”) provides trust services across Canada. STC is an affiliate of Raymond James Ltd.STC is not a Member of the Canadian Investor Protection Fund.