Can you make gifts under a durable power of attorney? The answer, according to a recent Massachusetts Court of Appeals decision, is yes.
The Facts
Frances R. Fern passed away in 2018 leaving the bulk of her $37 million estate to her three children, Anthony, Christopher and Tracey. Prior to her death, Anthony and Christopher used Frances’s durable power of attorney to make gifts to themselves totaling $5.576 million, plus a $43,000 gift to Anthony’s long-term partner.
Tracey, who is a half sister of Anthony and Christopher, challenged those gifts, arguing that they were not authorized under the power of attorney, were not intended by Frances, and breached Anthony and Christopher’s fiduciary duty to Frances.
Frances was apparently a difficult person and her relationships with her children were fractious. Over the years, she had executed various wills, essentially disinheriting Tracey in one and Christopher and Anthony in another.
Her final durable power of attorney appointing Anthony and Christopher as her agents authorized them “[t]o make outright gifts of my property to or for the benefit of such persons who, in the opinion of my said attorney, would be the donees I may choose.”
In her final years, Frances suffered from Alzheimer’s disease and in 2013 moved to a health care center where she remained until her death. During this time Anthony, Christopher and Anthony’s partner visited her several times a week. Tracey visited her just once.
The gifts were made in 2016, partly in anticipation of impending tax law changes.
After an eight-day trial, a probate court judge rejected Tracey’s claims and found in favor of Anthony, Christopher and Anthony’s partner.
Tracey appealed.
The Decision
The Court of Appeals in Tracey E. Fern vs. Anthony W. Baker, et al. (Mass. App. Ct. No. 24-P-1349, March 27, 2026) starts its consideration of Tracey’s appeal by stating that the agents under a power of attorney should seek to carry out the wishes of the individual who appointed them. In addition, powers of attorney are “subject to a rule of strict construction,” meaning that they only grant the powers explicitly stated in the document.
Dealing with the second standard first, the Court finds that the power of attorney did not bar Anthony and Christopher from making gifts to themselves, but they still had the burden of proving that doing so was consistent with their fiduciary duty.
Much of the Court’s discussion of these issues involves two cases involving durable powers of attorney, Gagnon v. Coombs, 39 Mass. App. Ct. 144, 157 (1995). Tracey argued that these Gagnon barred fiduciary self-dealing, but the Court explains that it only barred unauthorized self-dealing and did not require that specific words be used to grant the agents under the durable power of attorney to make gifts to themselves:
Here, Frances’s clear intent, expressed in unambiguous language, was to authorize Tony and Chris to make gifts of her property to those persons who, in their opinions, would be “the donees [she] may choose.” If Tony and Chris could prove that gifts to themselves met that standard, then for a court to construe the gifting power so strictly as to nevertheless bar such gifts — particularly to two of the most natural objects of Frances’s affection — would risk “destroying the purpose of the power” (citation omitted). Gagnon, supra. We therefore conclude that the gifting authority in the power of attorney permitted gifts to Tony and Chris.
In terms of donative intent, the Court finds that Anthony and Christopher did not have to show that Frances intended to make the specific gifts to them but instead whether “Frances would have chosen to make the gifts at issue” if she had been able to act herself. The burden of proving this standard was on Anthony and Christopher, but it finds that they met that burden at trial:
Here the judge made extensive findings, based on testimony of Tony and Chris that the judge expressly credited, and then concluded that Tony and Chris “met their burden to prove that they acted in good faith and in [Frances’s]
interests in making the gifts.” “They demonstrated that in their reasonable opinion[s], [Frances] would have chosen to make the gifts and would have chosen not to make gifts to Tracey.”
As for who would receive gifts, Frances told Tony “that her only concern was who was with her in her old age.” The judge credited Tony’s and Chris’s testimony that, in Frances’s final years, the three people in her life were themselves and Lisa, while “Tracey was not part of [Frances’s] life, and [Frances] would not have wanted to ‘reward’ her.””
Conclusion
Frances’s durable power of attorney allowed her agents to make gifts and did not bar them from making gifts to themselves. They did, however, have the burden of proving that doing so was consistent with what Frances would have likely done herself had she not suffered from Alzheimer’s disease.
Given that durable powers of attorney are to be strictly construed, the gifts would almost certainly not have been authorized if the Frances’s durable power of attorney had not included a gifting power. So, when considering whether to make a gift under a durable power of attorney the agent must consider (1) whether the document includes a gifting power, (2) whether it includes any limitations that might bar the gift, (3) whether the gift is consistent with the grantor’s intent as previously expressed or acted on, and (4) whether they will be able to prove that intent if it were challenged.