Can a son grant himself a gift of $250,000 on behalf of his mother with dementia if she had intended for him to have the money — and he has legal authority to manage her financial affairs?
“With some regret, I have concluded that the proposed gift is not lawful” under B.C.’s Power of Attorney Act, wrote Justice Geoffrey Gomery of the B.C. Supreme Court in his recent reasons for judgment.
Eugene Derreth, the only child of Doreen Derreth and of Reinhard Derreth, who died last year, had filed a petition asking if he could legally access money from the 2010 sale of the family vacation home on Keats Island, according to the judgment.
The parents had invested the proceeds in a joint account and told Eugene that when one of them died, he and the surviving parent would split the proceeds “and he would receive one-half as an immediate gift.”
This was corroborated by a detailed memorandum written by Reinhard that was given to Eugene and Doreen in 2018, Gomery wrote.
In his petition, Eugene sought an order authorizing him to transfer $250,000 of the cottage sale to himself as his parents had intended.
The judge wrote that if the order were to be granted, Doreen would be left with more than $3 million, including $356,000 from the cottage proceeds. She is not at financial risk because her monthly care home costs are covered by the interest from her investments, said Gomery.
“Accordingly, what is in issue is whether Eugene may receive $250,000 immediately or must await his mother’s passing,” he wrote.
In his decision, Gomery said powers of attorney, common in estate planning, “are both useful and treacherous” because they can be used to dispose of property without the owner’s consent.
“The owner is therefore vulnerable to misuse of the power of attorney,” especially when that person is no longer legally competent, he said.
The act allows for gifts or loans under a number of conditions, including if the owner has sufficient property remaining for their own personal and health care needs, and if the owner previously made those types of gifts when they were capable.
“The intention is clear,” the judge wrote. A gift or loan “is only permitted if the enduring power of attorney expressly permits.”
Doreen’s power of attorney document, made in 2008, appoints Eugene in accordance with the act and “to do on my behalf anything that I can lawfully do by an attorney.”
Gomery called that language in the document “entirely general. … It does not expressly contemplate its use to make a gift or loan.”
“The power of attorney does not expressly permit Eugene to effect a $250,000 gift to himself from Doreen’s funds,” the judge wrote. “It makes no difference that Doreen intended the gift, prior to her incapacity. Express permission in the power of attorney is required … and it is absent.”
Gomery also dismissed Eugene’s request for his legal costs to be paid by his mother’s estate.
