Can power of attorney sell property to himself? This is such a controversial question for many families dealing with aging or estate planning, power of attorney is vital, especially if the elderly person’s mental capacity is a concern. It simplifies legal and financial matters, but it’s a broad authority.
Depending on how it’s structured, it can, in some cases, allow for the transfer of money and property, though this is rare and specific. Power of attorney laws vary by state, so consulting an attorney is wise.
A financial advisor can also explore alternatives for estate planning.
What Is Power of Attorney?
Power of attorney lets someone make binding decisions for you, including managing finances, medical choices, and legal commitments. It grants access to confidential materials and is as binding as if you made the decisions.
Power of attorney is usually limited in scope, allowing specific actions. For example, granting power of attorney to a tax preparer lets them file taxes on your behalf and access IRS records but doesn’t extend to signing contracts or selling your assets.
In some cases, a general power of attorney offers broad decision-making authority, while other types, like special and healthcare power of attorney, have specific purposes. People often choose general power of attorney for trusted individuals when they might be unavailable or incapacitated.
Limits on Power of Attorney Asset Transfers
A power of attorney, even a general one, has limits. Generally, it can’t transfer assets from the grantee to the agent, as this is often considered fraudulent. Laws prevent self-dealing, and the grantee, family members, or potential heirs can enforce these laws.
The rule also applies to transfers in the agent’s interest, like transferring assets to a spouse or child without specific written consent from the grantee. Generally, this consent should be detailed and not vague.
Notarization may be required for such authorization. Grantees can only provide this authority if they are mentally and legally competent, so it’s crucial to plan for this in the original grant, as amending the document later may not be possible.
Alternatives to a power of attorney selling property to himself
To avoid conflicts with a POA selling property to themselves, consider these alternatives:
- Create a Trust: Establish a living trust with a successor trustee for property management.
- Co-Ownership: Add the intended buyer as a co-owner before incapacity.
- Transfer on Death Deed: Use TOD deeds, designating a beneficiary to inherit and sell the property.
- Joint Tenancy: Set up joint tenancy for automatic inheritance and sale rights.
- Family Limited Partnership: Consider an FLP or LLC for more complex estate protection.
- Guardianship/Conservatorship: Opt for court-appointed oversight of property management.
Seek advice from an estate planning and real estate attorney for the best fit.
The Bottom Line
A durable power of attorney typically doesn’t allow asset transfers to the agent. However, with specific written consent, it may be used for compensation or family asset transfers. Remember the distinction between a power of attorney and an estate executor.