Can a Power of Attorney Transfer Money to Themselves for Personal Use?
Creating a power of attorney document (POA) is not an easy job. Not only do you have to decide the type of POA you want, but you also need to choose the right person to transfer the power to. It is crucial to ensure that you pick a person who won’t abuse power and trust you give to them.
Can a power of attorney transfer money to themselves? Is it possible for an agent to abuse their power? These questions are bound to pop up sooner or later.
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A power of attorney is a legal document for transferring the authority to make business and other legal decisions from the principal to their agent. It is frequently used when the principal has an illness or disability that renders it impossible for them to sign documents and make important decisions independently.
The first thing you need to know before creating a power of attorney document is what POA type you need:
|Power of Attorney Type||Brief Explanation|
|General||The agent acts on behalf of the principal in all business and legal matters|
|Limited||The principal allows the agent to act on their behalf on specific matters|
|Springing||A specific event triggers the effective date of the document|
|Durable||The agreement continues to be in effect even if the principal is mentally or physically incapacitated|
|Medical||This specific document appoints family members, close friends, or health care workers as decision makers for the principal regarding healthcare|
|Financial||The agent has the power to manage financial matters, like:
With great power comes great responsibility. The agent must make sure that they honor the duties bestowed on them, but what if they misuse their power and transfer money to themselves for personal use?
POA abuse is the misuse of the power of authority and is prohibited and punishable by law. Activities including the abuse of power of authority can include:
- Not acting in the best interests of the principal
- Selling or transferring a real estate title unless instructed to do so by the principal
- Forging the principal's signature on documents
- Taking money for personal use
The short answer is no. When you appoint an agent, you control the type of financial activities they can carry out on your behalf. A power of attorney holder cannot transfer money to spend on themselves without express authorization. Even when the agent has access to all finances of the principal, they are restricted from using that money for personal needs. In case the agent has the authorization to claim some amount as compensation, they must have proper documentation for it.
Even if the agent wants to borrow money, the principal needs to provide written consent and must state the exact amount of the borrowed sum.
If you suspect that your agent is taking money from you, here is a list of steps that you need to follow:
- Prove the misuse—Your financial records should indicate if there was any suspicious activity. You can also ask to check the agent’s financial records to see if they deposited the same amount into their bank account
- Change the scope of their authority—Consult your lawyer and change the agent or the type of power of attorney. You can take away your agent’s access to your finances or their power to handle any business transactions
- Report the abuse—Talk to a lawyer if you feel that your agent is abusing the power of attorney. Depending on state laws, your lawyer will either revoke the power of attorney or file a legal claim against your ex-agent
- File a legal claim—As a last resort, you can file a lawsuit against the agent for misappropriating your assets
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