When and on what basis should the Court permit the child of an incompetent parent to use an enduring power of attorney (POA) to effect a gift of money from the parent to the child? In Derreth (Re), 2024 BCSC 1033, the BC Supreme Court considered this question and confirmed the limitations as set out in the Power of Attorney Act.

Doreen and Reinhard Derreth were married and had one child - Eugene Derreth (the petitioner). At some point before the father died, a memorandum was prepared wherein the parents set out their wishes for their son to receive a portion of his inheritance immediately upon the death of the first parent. The proposed gift would leave more than enough cash on hand to ensure that the surviving parent would be comfortable for the remainder of his or her life.

When the time came for the son to claim his gift, the mother had become incapable, and the son was managing her financial affairs via a POA. Despite the memorandum, the POA itself contained no express provision that would allow the attorney (the son) to make a gift from the donor’s (the mother’s) assets.

The POA Act provides that such a gift is only permitted in circumstances where the POA expressly permits it. As a result, the court was not able to make an order allowing the gift to proceed.

This case highlights the importance of a thorough estate planning process that contemplates such scenarios prior to incapacity, and of a POA that includes all of the necessary tools to see through a donor’s wishes. Want to know more? Call or email us today!

This article is intended for information purposes only and should not be taken as the provision of legal advice. Grace C. Cleveland is a lawyer with the law firm of Cleveland Doan LLP and can be reached at (604)536-5002 or grace@clevelanddoan.com.