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Can a Tennessee Power of Attorney Give Themselves a Gift?

Posted on Oct 26 2014 7:45PM by Attorney, Jason A. Lee

One issue that comes up on occasion in Tennessee is whether an attorney-in-fact, under a Power of Attorney, can give gifts to themselves as power of attorney.  A recent Tennessee Court of Appeals’ decision, In Re: Conservatorship of Alfonso B. Patten, No. M2012-01078-COA-R3-CV, 2014 WL 4803146 (Tenn. Ct. App. 2014), discusses a situation where an attorney-in-fact gave herself significant gifts of money and real estate by utilizing the Power of Attorney of her father (the “Ward”).  These gifts were given with “no consideration” which means she did not pay anything for the “gifts”. 

 

The question, therefore, was whether the Power of Attorney document language allowed the attorney-in-fact to give gifts to herself and her husband.  Under Tennessee law, an attorney-in-fact can give gifts to himself or herself if the plain language in the Power of Attorney document provides for such a power in a clear and unambiguous way.  In this case, the attorney-in-fact argued that the Power of Attorney document provided clear language giving authority to give gifts.  Additionally, under T.C.A. § 34-6-110(a)(2), provides that “if the attorney-in-fact has the authority to make gifts, he or she may make gifts of the principal’s property in accordance with the principal’s personal history of making or joining in the making of lifetime gifts.”  The Court in the Patten case at issue found that the pattern of small gifts over the years by the Ward did not translate into a pattern of giving at the level of gifts that were given in this situation (totaling property in excess of $1,000,000.00).  As a result, in this particular case the Court found the Power of Attorney document did not provide explicit authority to give gifts and the gifts that were given were not in accordance with the prior actions of the father. 

 

The bottom line in Tennessee is that it is very risky to give gifts to yourself by using a Power of Attorney.  The gift giving power must be explicitly authorized in the Power of Attorney document or you run a great risk of being found to have breached the fiduciary duty or even of stealing (conversion) from the Ward.  If you have a Power of Attorney and are considering giving gifts of any kind - to any individual including yourself - you should consult an attorney to determine whether it is legitimate under the document.  Further, whether the prior pattern of gift giving establishes support for giving gifts under the Power of Attorney.  If you do not do this, you risk having a significant exposure in the future to a lawsuit on this issue.

 

Follow me on Twitter at @jasonalee for updates from the Tennessee Wills and Estates blog.

TAGS: Power of Attorney
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Jason A. Lee is a Member of Burrow Lee, PLLC. Contact Jason at 615-540-1004 or jlee@burrowlee.com for an initial consultation on wills estate planning and probate issues.

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Tennessee Wills and Estates Blog
Jason A. Lee, Member of Burrow Lee, PLLC
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Nashville, TN 37203
Phone: 615-540-1004
E-mail: jlee@burrowlee.com

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