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How Does Power of Attorney Work?

Estate Planning For Life's Stages

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For many families with elderly people or engaged in estate planning, power of attorney is essential, especially if the elderly person’s mental abilities are compromised. Having someone who can take care of legal and financial matters can make this part of life far easier. However, power of attorney is a sweeping grant of authority.
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Depending on how you structure a power of attorney, an agent can – in some instances – transfer money and property to themselves.

However, it’s uncommon and only allowed in specific circumstances and the laws vary by state.

Yahoo Finance’s recent article entitled “Can a Power of Attorney Transfer Money to Themselves?” explains that a POA is when you assign someone (known as an agent or attorney-in-fact) the authority to make legally binding decisions on your behalf. Most of these documents have a limited grant of authority.

A general POA  is a type of durable POA  (the other two are special power of attorney and healthcare or medical power of attorney). With this, an agent is permitted to make just about any decisions at all on your behalf while the POA assignment remains valid. However, even a general POA has limits.

An agent typically can’t transfer money, personal property, real estate, or any other assets from the grantee to him or herself, and it’s usually deemed a fraudulent conveyance.

However, a power of POA can transfer assets to themselves, if they have specific written consent from the grantee (or creator of the document).

The grantee can authorize most forms of property transfer, provided the assets are theirs to give and the authorization is specific.

A grantee can only give this authority to an agent, if he or she is mentally and legally competent.

If you think you’ll want your power of attorney to have this authority at some point, be sure to write it out in the original grant because you may not be able legally to amend this document when the issue comes up in the future.

Reference: Yahoo Finance (Sep. 21, 2021) “Can a Power of Attorney Transfer Money to Themselves?”

Suggested Key Terms: Estate Planning Lawyer, Power of Attorney

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