I was recently asked about whether, and when, an attorney for property can make charitable gifts on behalf of a grantor. The answer depends in part on whether the grantor of the power of attorney (the “POA”) is capable of managing property at the time the gift is made.
While the grantor is capable, the attorney-grantor relationship is mainly one of agent and principal. The attorney’s primary responsibility is to carry out the instructions of the grantor. While the grantor is capable, therefore, charitable gifts should only be made at the grantor’s instruction.
When the grantor loses capacity, he or she becomes incapable of providing instructions to the attorney regarding the management of his or her property. The attorney must instead act on the basis of instructions previously provided (normally in the POA itself) and in accordance with his or her fiduciary duties and statutory obligations. The attorney’s role changes from one of agent to one of quasi-trustee.
In Ontario, the Substitute Decisions Act (the “SDA”) sets out an attorney’s powers and obligations in dealing with an incapable person’s property, requiring that they “be exercised and performed diligently, with honesty and integrity and in good faith, for the incapable person’s benefit.” Any charitable gifts during the grantor’s incapacity must be made in accordance with this standard.
In addition, the SDA prohibits the making of charitable gifts on behalf of an incapable grantor unless the following conditions are met:
- The POA authorizes the making of charitable gifts or there is evidence that the grantor made similar gifts while capable;
- The grantor will be left with sufficient property after the gift to make expenditures reasonably necessary for: (i) his or her support, education and care; (ii) the support education and care of his or her dependants; and (iii) any other expenditures necessary to satisfy the grantor’s legal obligations;
- The total amount of charitable gifts made by the attorney does not exceed the lesser of: (i) 20% of the income of the grantor’s property in the year in which the gifts are made; and (ii) the maximum gift limit, if the grantor provided for one in the POA; and
- The grantor while capable did not express a wish that charitable gifts not be made (e.g. through a letter of wishes or the POA).
In addition, the SDA generally prohibits an attorney from disposing of property the donor had intended to gift by Will. Charitable gifts therefore should not be made if they would alter the testamentary intentions of the donor.
 The Ontario case of Banton v. Banton,1998 CanLII 14926, provides a good discussion of the differing nature of the attorney-grantor relationship during the grantor’s capacity and incapacity.
 SDA, s. 32(1).
 Ibid, s. 34(7).
 It is possible for the attorney to apply to the court for authorization to make a larger gift.
 SDA, s. 35.1(1).