Power of Attorney Includes Gifting Authority As “Transfer”

JANUARY 19, 1998 VOLUME 5, NUMBER 29

George Pittman was a North Carolina resident. He and his wife, Rose Lupton Pittman, lived together on property he had inherited from his family. Mr. and Mrs. Pittman each had a daughter from prior marriages.

In 1988, Mr. Pittman consulted his attorney about what might happen to his property. He expressed concern about the possibility that the home might be taken from his wife if anything happened to him. He specifically indicated that he did not want either his daughter or the government to ever be able to take the home away from his wife.

North Carolina law permitted Mr. Pittman to execute a durable power of attorney, and even provided a form for him to use. His attorney took the statutory form and added one sentence–he included the power to “transfer the real estate known as the homeplace that I inherited from my mother.” With that change, he had Mr. Pittman sign the power of attorney, giving Mrs. Pittman the power to manage his affairs.

Five days after signing the power of attorney, Mr. and Mrs. Pittman met again with Mr. Pittman’s lawyer. This time, he had prepared a deed transferring Mr. Pittman’s interest in the “homeplace” to Mrs. Pittman. With Mr. Pittman present and directing her to sign for him, Mrs. Pittman signed the deed, using her power of attorney as authority.

Mr. Pittman died a year and a half later. Since she had already transferred the home into her own name, Mrs. Pittman did not make any reference to it in the probate proceedings which she filed. Shortly after that, Mrs. Pittman died, leaving her entire estate (including the home she had inherited from her husband) to her own daughter.

Mr. Pittman’s daughter sued, alleging that the transfer of the home into Mrs. Pittman’s name was invalid. She argued that a power of attorney does not permit making of gifts unless there is specific language to that effect. She also argued that Mr. Pittman was already incompetent by the time he signed the power of attorney.

After hearing legal arguments, the trial judge agreed with Mr. Pittman’s daughter and set aside the transfer of the home to Mrs. Pittman. The Court of Appeals agreed, and Mrs. Pittman’s daughter appealed to the North Carolina Supreme Court.

The Supreme Court agreed with the general proposition that a power of attorney does not convey authority to make gifts unless it includes specific language to that effect. The North Carolina statutory form power of attorney did not include such language. In this case, however, Mr. Pittman had also given his agent the power to “transfer” the homeplace; the Supreme Court ruled that the power to transfer included the power to do so as a gift. Mrs. Pittman was therefore the owner of the property, and validly left it to her own daughter upon her death. Whitford v. Gaskill, North Carolina Supreme Court, February 10, 1997.

Although Arizona does not have a statutory form for powers of attorney, most readily available versions do not include the power to make gifts. Arizona would likely follow the holdings in North Carolina and other states, and would invalidate gifts made by agents unless the power of attorney included specific authority to make gifts.

In Arizona a gift made without express authority by an agent using a power of attorney may also be grounds for invoking the law governing exploitation of vulnerable adults. Under that law, if the gift is made to the agent (or a close family member of the agent), it may even be possible to recover damages of three times the amount transferred. Such a recovery would depend on the particular facts of a specific case, but it should be clear that use of a form power of attorney, without legal advice, can be a dangerous undertaking.

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