Gifting with Financial Powers of Attorney

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Is Your Power of Attorney Powerful Enough? The Hidden Dangers of Gifting Limits

Many people believe that once they have a General Durable Power of Attorney (POA), their appointed agent can do “anything” needed to manage their financial affairs. This is a dangerous misconception. In reality, a POA only grants the specific authority written within its pages, and most standard documents come with significant, often hidden, limitations.

The Problem with “Standard” Powers of Attorney

In North Carolina, many people have what is known as a “short-form” POA. This document, often just a few pages long, typically references the N.C. General Statutes, which outline the powers granted to an agent. While this seems efficient, it means the document’s true authority—and its limitations—are buried in legal code, not spelled out in plain English.

One of the most critical limitations involves gifting. While a standard POA might have a checkbox to “allow gifting,” the statutes often restrict this power to only the types of gifts you have historically made. This can create a major roadblock when your family is facing a crisis.

The Powers Your Family Might Desperately Need

When planning for long-term care, your agent may need the authority to make strategic financial moves to protect your assets. A standard POA is often missing the key provisions that allow your agent to:

  • Gift assets to your spouse, which is a crucial step in planning for Medicaid eligibility.
  • Transfer property into an irrevocable trust for asset protection.
  • Make gifts that exceed the annual federal gift tax exclusion amount (currently $18,000 per person for 2025).
  • Make gifts to themselves, which is vital if your agent is your spouse and needs to reposition assets into their name.

The High Cost of an Inadequate Document

Without these specific powers, your family’s hands may be tied during a medical emergency. If your agent cannot legally make the necessary financial moves to protect your assets, your loved ones may be forced to spend down your life savings on long-term care. Their only other option might be to pursue a traumatic and expensive guardianship proceeding in court to have you declared incompetent.

To avoid these devastating outcomes, it is essential to have a robust, comprehensive Power of Attorney created as part of your life care and estate plan. An experienced elder law attorney can ensure your document contains the specific, powerful language needed to protect you and your family when it matters most. Call our office at (919) 256-7000 to schedule a consultation.