Scenario: You have Mom’s power of attorney. Gift giving season is rapidly approaching, so you decide to buy some gifts for Mom to give to your siblings, the grandkids, YOU, etc. Our firm has litigated the first trial in Iowa under the new adult abuse law. If you are not careful, gift giving can create a sticky situation that may land you in front of a judge. Here are some things you need to know, and some steps to take to be sure you are not putting yourself in legal jeopardy.
- Read the Power of Attorney form. It should specifically state whether or not you are allowed to buy gifts on behalf the Principal (Mom). Older Powers of Attorney forms frequently stated that the Agent (you) was not allowed to buy gifts for yourself. However, some prohibit gift giving, altogether.
- Powers of Attorney that were signed after July 1, 2014, have a provision that allows the Principal to pick a third person who has to approve all gifts that are bought with the Principal’s money.
- If the Power of Attorney does allow you to buy gifts, keep a clear record of what gifts you bought, how much they cost, and for whom they were purchased.
- Do not spend money that the Principal would not have spent. For example, if mom always gave the grandkids each a Christmas present with a $20 value, then do not buy them gifts worth $40.
- It is okay to give cash gifts. However, I would not use actual dollar bills. Write checks or use cashier’s checks instead, if the gift is over $10.00.
- Use Mom’s account to buy the gifts. DO NOT put the gifts on your own credit card or write your own checks, and then reimburse yourself out of Mom’s account.
- Be mindful of Mom’s financial situation. If she may need to qualify for Medicaid benefits within the next 5 years, her gift giving history will be reviewed. Significant gifts can disqualify her, or you may find yourself asking the siblings or grandkids to give money back.
- Unless the Power of Attorney specifically states that you are allowed to buy gifts for yourself, then DON’T.
- Be very cautious in making charitable donations with Mom’s money, even if it is her habit to do so. It, too, can lead to Medicaid benefit qualification problems.
