Gifts made under power of attorney were valid.A common estate planning Estate Planning The overall planning of a person's wealth, including the preparation of a will and the planning of taxes after the individual's death. Notes: Contrary to popular belief, estate planning involves much more than preparing a will, and it is not only for the 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 Metzger is a German word meaning "butcher" and may refer to:
In a second case, Joseph Ridenour gave his son James power Dr. James Power is a fictional character in the Marvel Universe. He is the husband of Margaret Power, and with her the father of Alex, Julie, Jack, and Katie Power. of attorney to be used if Joseph became incapacitated in·ca·pac·i·tate tr.v. in·ca·pac·i·tat·ed, in·ca·pac·i·tat·ing, in·ca·pac·i·tates 1. To deprive of strength or ability; disable. 2. To make legally ineligible; disqualify. . The power listed specific acts James could perform and contained a general grant of authority to perform "all and every act." The power to make gifts was not specifically listed. Joseph was in the habit of making $10,000 yearly gifts to his heirs. After he became incapacitated, his son wrote checks on the father's account for amounts under $10,000 to himself and others. In a later estate tax dispute following Joseph's death, the IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. added the gifts made under the power back into the estate, claiming that under Virginia law the gifts were revocable rev·o·ca·ble also re·vok·a·ble adj. That can be revoked: a revocable order; a revocable vote. Adj. 1. transfers--incomplete gifts--since the power to make a gift had not been specifically stated in the power of attorney document. The Tax Court, interpreting Virginia law, said the gifts were irrevocable and should not have been included in Joseph's gross estate. The Court of Appeals for the Fourth Circuit upheld the Tax Court decision. Note: Had the power to make gifts been specifically stated in the power of attorney, the litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. could have been avoided. * Ridenour Est. (4th Cir., 1994). |
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