Articles of interest

A CAPACITY FOR GIVING


By Barry S. Corbin--As a philanthropically-minded individual, you may already have established a plan or pattern of charitable giving during your lifetime.  In that same spirit, you may also have put in place arrangements – for example, through testamentary bequests, life insurance, RRSPs, RRIFs or charitable remainder trusts -- that will benefit charities of your choice upon your death.  Have you thought about how your charitable giving plans would be affected by an unexpected loss of mental capacity?
 
If you expect your charitable giving plans to be carried through by your guardian of property1, you should be aware of the ground rules on charitable giving found in Ontario’s Substitute Decisions Act, 1992:
 
  • Your guardian of property may make optional charitable gifts, subject to certain restrictions:
    1. Your remaining assets must be sufficient (a) for the support, education and care of you and your dependants; and (b) to satisfy your other legal obligations.
    2. You must not have expressed a wish that charitable gifts not be made (even, apparently, if that wish is expressed while you are mentally incapable).
    3. The charitable gift cannot exceed any maximum value or amount you have specified in a continuing power of attorney; nor, unless a court authorizes it, can the charitable gifts made in any year exceed twenty percent of your income in that year.
However, your guardian of property may not make charitable gifts unless (a) you authorized him or her to do so in a continuing power of attorney, or (b) there is evidence that you made similar charitable gifts while mentally capable.
  • If you want to ensure that your guardian of property makes specific charitable gifts while you are mentally incapable, you should have in place a continuing power of attorney that directs him or her to do so.  He or she will then be obliged to follow those directions, unless one of the above enumerated restrictions applies.
  • Your guardian of property is not permitted to dispose of property while you are mentally incapable if that property is the subject of a specific bequest in your Will.  However, that prohibition is subject to an important exception; namely, the property can be disposed of to the beneficiary intended to receive it under your Will.  So, for example, if you have directed in your Will that upon your death your art collection is to be donated to a particular cultural institution, your guardian of property may gift the collection to that institution during your lifetime, subject to the limitations described earlier.
Evidently, you can do much to bolster your philanthropic goals by having a carefully drawn continuing power of attorney that authorizes and/or directs charitable gifts to be made in furtherance of those goals.
 

[1]   A n incapable person’s property can be managed by an attorney appointed under the incapable person’s continuing power of attorney or by a statutory or court-appointed guardian of property.   For brevity, the term “guardian of property” is used throughout.