A power of attorney is a crucial estate planning document granting an agent authority over legal and financial matters. Can they transfer assets to themselves? Usually no, unless specific permission is given.
Can someone with power of attorney transfer money to themselves? Read on for the answer and everything else you need to know.
What is Power of Attorney?
A power of attorney (POA) grants someone legal authority to act on your behalf. The agent can manage finances, property, or health care decisions. Various types of POAs provide different levels of control over the principal’s affairs.
Types of Power of Attorney
Different types of power of attorney (POA) grant varying authority:
- General POA: Agent manages all legal, financial, and healthcare matters for the principal.
- Special POA: Agent’s authority is limited to specific tasks, like managing a bank account.
- Financial POA: Agent oversees financial matters on the principal’s behalf, often a form of special POA.
- Medical POA: Agent decides on medical issues if the principal can’t, e.g., during a coma.
POAs also differ in when they take effect. Notably, durable POA remains valid if the principal becomes incapacitated, while non-durable POA does not.
The duration of a POA depends on its type and specific provisions. All POAs, however, expire upon the principal’s passing.
A power of attorney cannot transfer money to themselves for their own benefit
Can a power of attorney transfer money for self-gain? No, agents must act in the principal’s best interest. They can manage finances, pay bills, and deal with financial institutions but must avoid self-dealing.
Abusing a power of attorney could lead to criminal charges like theft, embezzlement, or fraud depending on state laws. If an agent wrongly transfers money to themselves, the principal can revoke the POA if of sound mind. If not, others may seek court intervention to override it.
Could a power of attorney transfer money to their spouse or child?
No, a power of attorney cannot give money to a family member for personal gain. It goes against their duty to act in the principal’s best interest and constitutes an abuse of power of attorney. If such a transfer occurs, the principal can revoke the POA if mentally sound, or others can go to court to override it.
When could a power of attorney transfer money to themselves?
In some situations, a power of attorney can legally transfer money to themselves with explicit authorization from the principal. Here are scenarios where this might occur:
- Compensation for their services: If the principal intends to pay the agent, it should be clearly stated in the POA, and the agent should track their work.
- Reimbursement for expenses incurred during their role: Agents may seek reimbursement for necessary expenses, documented diligently.
These transfers should serve a legitimate purpose and require written consent from the principal, especially if the principal is deemed legally incompetent. If the principal is of sound mind, confirming their approval is generally straightforward.
Selecting an agent
Agent requirements typically involve being mentally sound and at least 18 years old. Trust is crucial when selecting an agent, as their decisions can greatly impact your assets and well-being.
Trustworthy children and spouses are common choices, but consider age differences. Professionals like attorneys or accountants can also serve as agents, often for a fee.
Choose your agent carefully, as they will wield significant power over your legal and financial affairs.
Can a power of attorney move money to themselves? In some limited cases, yes, with explicit written consent from the principal and for valid reasons. However, agents must not benefit personally.
Agents must act in the principal’s best interests, and any self-dealing is an abuse of power. Proper documentation is essential to justify such transfers when needed.
Consult an estate planning attorney if you have questions about power of attorney documents.