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Home » Blog » Can a Power of Attorney Transfer Money to Themselves?

Last Updated: January 2, 2025

Can a Power of Attorney Transfer Money to Themselves?

Can someone with power of attorney withdraw money from the principal’s bank accounts? Can a power of attorney withdraw money after death? Can a power of attorney take money for personal use? Can a power of attorney write checks to themselves? What can be done if a power of attorney is spending mom’s money or dad’s money irresponsibly?

A power of attorney can be a useful estate planning tool, but only if the agent uses their authority for the right reasons. Learn about what a power of attorney can and cannot spend money on, as well as what to do if a power of attorney is misusing the principal’s money.

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Can a power of attorney gift money to themselves? Can a power of attorney gift money to family members? What can a power of attorney spend money on? What can’t they spend money on? 

Suppose a sibling is designated as your parent’s agent under a power of attorney. Upon reviewing your parents’ bank statements, you notice large sums of money to be missing from their accounts. You investigate the matter further by reviewing the accountings provided to your parents by your sibling, but they fail to explain the missing sums of money. As a result, you suspect your sibling to be unauthorized withdrawals of your parent’s money. 

This is a scenario in which it’s very possible a power of attorney (called an attorney-in-fact or agent) is wrongfully transferring money to themselves. While there generally would be no question about the legality of an agent using the principal’s money to benefit the principal, it’s likely your sibling is favoring their own best interests over those of your parent — which, if true, may be considered a breach of the agent’s fiduciary duties.  

While the example we provided was more of a cut-and-dried case of power of attorney abuse, there are some situations that could arise that are more ambiguous.  

For example, would an agent be authorized to take a fee for the hours they spend managing the principal’s finances? Would they be able to use the principal’s credit card to fill their gas tank if they were using their car to conduct business on behalf of the principal? 

Continue reading to learn what a power of attorney is, and the situations in which an agent may be able to use the principal’s money.

TELL US WHAT HAPPENED. WE’LL BE IN TOUCH SOON.
Table of Contents
Power of Attorney: A Brief Overview

Section 1

When Can a Power of Attorney Take Money for Personal Use?

Section 2

What Is Self-Dealing?

Section 3

What Can a Power of Attorney Spend Money On?

Section 4

How Can An Attorney Help With Your Power of Attorney Case?

Section 5

power of attorney

Power of Attorney: A Brief Overview

A power of attorney is a legal document that grants an agent the authority to make decisions on behalf of a principal. Agents have a fiduciary duty to always act in the principal’s best interests. When they violate this duty, their actions could be construed as power of attorney abuse. 

An agent charged with making medical decisions for the principal has what is known as a health care power of attorney, whereas an agent charged with making legal and financial decisions for the principal has what is known as a general power of attorney. In this article, we will be focusing primarily on general powers of attorney. 

While a power of attorney has countless uses, most people sign one as a means to protect themselves should they become incapacitated during their lifetime.  

For instance, if a principal were to have a debilitating stroke, their agent may be able to step in to pay their rent, insurance premiums and other expenses until they regain the ability to complete these tasks on their own.  

A power of attorney must be signed by a person with capacity, or it could be considered invalid. If an incapacitated person requires help managing their personal or financial affairs, a conservatorship may be the only viable solution. However, the court generally will not grant a conservatorship if a less restrictive alternative to conservatorship can be used. 

If you’re an agent, having power of attorney can empower you to help the principal manage essential aspects of their life, but it must be used responsibly for the maximum benefit to be provided to the principal. 

Learn more about POAs by visiting our main power of attorney page. Here, you can find out about the different types powers of attorney and the rules surrounding each.

Reasons to Obtain a Power of Attorney

While a power of attorney is particularly useful in an estate planning context, its uses extend far beyond estate planning.  

For example, one could use a power of attorney to authorize another adult to tend to their minor child while they’re away on an extended business trip. They, likewise, could use a power of attorney to authorize a business partner to sign documents on their behalf. 

If you’re an agent, it’s important you understand the specific terms of your power of attorney, so you do not make any decisions that go beyond the authority you’ve been granted. For help interpreting a power of attorney document, consult with one of our experienced probate attorneys.

Types of Power of Attorney

While most powers of attorney are broadly categorized as being either medical in nature or financial in nature, they can be further categorized by how and when they take effect. 

If a power of attorney is being used as an estate planning tool, it generally makes the most sense to classify the power of attorney as durable. A durable power of attorney takes effect upon signing and remains in effect until the death of the principal unless it is revoked before that time. When a power of attorney is durable, it can help ensure the agent will be able to take immediate action to protect the principal if the principal becomes suddenly incapacitated. 

A springing power of attorney takes effect after a principal’s incapacitation and remains in effect until the death of the principal unless it is revoked before that time. The caveat to be aware of with a springing power of attorney is that the agent will need to seek a determination of incapacity from the principal’s treating physician before they can start making decisions on the principal’s behalf.  

A nondurable power of attorney takes effect upon signing but expires upon the principal’s incapacitation (if they were to become incapacitated at some point in the future). 

A limited power of attorney generally is enacted for a specific purpose and time period. 

Principals should keep in mind that if they have capacity, they generally can revoke a power of attorney, regardless of its type, at any time.

Fiduciary Duties of an Attorney-in-Fact

An agent under a power of attorney is a fiduciary, which means they have specific duties they must fulfill for the benefit of the principal.

The fiduciary duties an agent under a power of attorney must abide by include:  

  • Duty of loyalty – The agent must be loyal to the principal’s interests and prioritize them above their own when making decisions on the principal’s behalf.  
  • Duty to avoid commingling assets – The agent must never mix their personal assets or any outside assets with those of the principal.  
  • Duty of disclosure – The agent must keep the principal informed of all the financial transactions and decisions they make on the principal’s behalf. They also must account to the principal and maintain thorough records. 
  • Duty of care – The agent must make a reasonable effort to abide by the principal’s wishes and remain within the bounds of their authority.

By placing limits on an agent’s authority, fiduciary duties help ensure the agent is using their power of attorney in the intended way and for the right reasons.

money

When Can a Power of Attorney Take Money for Personal Use?

Whether you are an agent, a principal or the loved one of a principal, taking time to understand what a power of attorney can and cannot spend money on is crucial. This way, if a line is crossed, the proper steps can be taken to prevent further damage to the principal’s finances and possibly even reverse any damage that was caused. 

In the following sections, we go over specific questions that could arise surrounding an agent’s use of the principal’s money. If you are seeking personalized legal advice, know that our experienced team of probate attorneys is always available to help.

Can a Power of Attorney Gift Money to Themselves?

Can a power of attorney spend money on themselves? Can a power of attorney write checks to themselves? Can someone with power of attorney withdraw money from the principal’s bank accounts? 

When it comes to spending a principal’s money, agents generally are limited to transactions that benefit the principal. If a transaction were to benefit an agent instead of the principal, it would not only be considered fiduciary misconduct, but it would make the agent liable to legal recourse.  

This would hold true whether an agent misappropriated the principal’s money using checks, withdrawals from their bank accounts or other means. 

The only circumstances that potentially would allow a power of attorney to take money for personal use would be if the principal (given they have capacity) were to provide them with express authorization to spend money on themselves, or if they were to take a fee for their services.  

Note that agents usually are not entitled to fees for their services unless the power of attorney document provides for their compensation.

Can a Power of Attorney Gift Money to Family Members?

While an agent can never gift a principal’s money to their own family members, they may have the authority to gift money to the principal’s family members and acquaintances. 

If an agent is authorized to gift money on behalf of the principal, it will be specifically stated in the terms of the power of attorney document. If the terms of the power of attorney don’t make any mention of an agent’s ability to give gifts, the agent should assume they are not authorized to do so. 

In cases where a power of attorney document does authorize gift-giving, there may be limits relating to how much, how often and to whom the agent is allowed to give. For example, the power of attorney may allow for an agent to provide each of the principal’s children with a $1,000 gift every month. 

To be on the safe side, agents should go over the terms of their power of attorney with a lawyer to ensure they understand what would and wouldn’t be authorized uses of the principal’s money.

Can a Power of Attorney Withdraw Money After Death?

Because a power of attorney automatically terminates upon the death of the principal, there are no circumstances under which an agent could legally withdraw money from the principal’s financial accounts after their death.  

As soon as an agent learns the principal has died, they should cease using their power of attorney. Any transaction made with a power of attorney after the principal’s death could be regarded as an unauthorized use of the power of attorney. 

Even though this rule is unambiguous, many agents continue to unlawfully withdraw funds from the principal’s accounts after their death, believing they’ll get away with it. They, however, may be found out by the estate or trust representative of the principal, who likely would notice the missing funds when accounting for the principal’s assets.

Can a Power of Attorney Borrow Money?

An agent would not be permitted to borrow the principal’s money unless the principal expressly gives them permission to do so or the terms of a power of attorney expressly allow it. Keep in mind that an incapacitated principal could not authorize the borrowing of money; they must have capacity to make significant decisions about their finances. 

That said, if an agent is borrowing money from a third-party lender on behalf of the principal to use for the principal’s benefit, they generally would have the authority to take out a loan. For instance, an agent may need to borrow money to make an investment on the principal’s behalf.

What Is Self-Dealing?

When a fiduciary misuses the assets of the person they represent to enhance their own personal interests, it’s considered self-dealing. Self-dealing can be tricky to detect since it doesn’t always involve obvious acts of misconduct like theft.  

For example, self-dealing in a power of attorney context could involve an agent selling the principal’s property to themselves for below fair market value so they can sell it later for a substantial profit.

Other examples of self-dealing in a power of attorney context include:  

  • The agent using the principal’s money to fund their own business endeavors or lifestyle 
  • The agent altering the principal’s estate planning documents to benefit themselves or their family members 
  • The agent borrowing the principal’s money, even if for a short time period, without the principal’s express consent  
  • The agent investing the principal’s assets in risky financial schemes that benefit the agent

If a principal signed a power of attorney as part of their estate plan, an agent may be acting on the principal’s behalf because they no longer have capacity. If this is the case, an agent may falsely believe the principal wouldn’t notice a few dollars missing here or there, but misconduct does usually have a way of being discovered, and when it is, the consequences can be severe for the agent.  

Learn more about the damage self-dealing can cause from the following section.

Why Is Self-Dealing Harmful?

When an agent is engaging in self-dealing, they’re usually in direct violation of the power of attorney agreement. The principal appointed an agent to prioritize their best interests, but instead, the agent chose to prioritize their own best interests. While this certainly is harmful to the principal and their finances, it has the potential to be just as harmful to the agent.  

For the principal, the harm of self-dealing could extend far beyond their finances. For example, the principal could have their inheritance wishes changed or even be deprived of certain rights.  

For the agent, self-dealing could result in the power of attorney being revoked or voided. Additionally, they may be ordered to return any assets they misappropriated, pay damages and possibly even their opponent’s attorney fees and costs.  

If the misdeeds perpetrated by the agent negatively impacted an elderly principal (i.e., they constituted elder financial abuse), the agent may have to pay double or treble damages. While rare, an agent may even incur criminal charges if their misconduct was egregious enough. 

There also can be emotional costs to self-dealing. Suppose a sibling was abusing their power of attorney by not properly carrying out their power of attorney obligations to family members. This could result in a permanent rift among members of your family.

What to Do if You Suspect Self-Dealing

If you suspect an agent to be engaged in self-dealing, it’s crucial you take immediate action to stop it. This will help prevent further harm to the principal and their finances.  

Who can take action against the agent will depend on the principal’s capacity, as well as on whether they’re alive.  

If the principal is alive and competent, they can revoke the power of attorney and litigate against the agent on their own.  

If the principal is alive but incompetent, their loved ones could file a petition to try to have the power of attorney voided and file an additional petition for conservatorship since the principal may need help managing their life. If a conservator is ultimately appointed, they can litigate against the conservatee’s former agent to recover any assets that were lost to self-dealing.  

If the principal is deceased, the personal representative of their estate or trustee of their trust usually will be the one to litigate against their former agent to recover misappropriated funds. 

If you suspect an agent was engaged in self-dealing, consult with a probate attorney as soon as possible to go over your options.

What Are Signs an Agent May Be Self-Dealing?

There are many ways an agent could self-deal in a power of attorney arrangement. Some of these ways are obvious, whereas others are more subtle. The best way to detect power of attorney abuse is to be on the lookout for potential signs of self-dealing and regularly request and review the agent’s financial transactions. Signs that a power of attorney agent may be self-dealing include:
  • Suspicious transactions
  • Accountings that don’t add up
  • Missing financial documents
  • Significant changes in the agent’s lifestyle
  • Noticeable changes in the agent’s behavior
If you detect red flags, it’s important to entertain the possibility that an agent’s actions may not be ethical. The best way to quell any concerns you have would be to discuss them with a qualified probate attorney.  
spending money

What Can a Power of Attorney Spend Money On?

While it’s easy to get caught up in all the ways a power of attorney can go wrong, there’s a lot of good a power of attorney can do as well. However, to effectively help the principal, the agent will need to use the principal’s money to fulfill the obligations of their role and provide the maximum benefit to the principal. 

An agent under a general power of attorney may be able to spend the principal’s money in the following ways:

  • To pay the principal’s bills  
  • To pay the principal’s housing expenses 
  • To pay the principal’s health care costs 
  • To pay the principal’s taxes 
  • To litigate on behalf of the principal 
  • To make safe investments on behalf of the principal 
  • To maintain the principal’s real estate properties 
  • To purchase real properties for the principal  
  • To sell real estate properties on behalf of the principal 
  • To make financial gifts on the principal’s behalf (only if expressly permitted by the power of attorney) 
  • To reasonably compensate themselves for their services (only if expressly permitted by the power of attorney)

Agents who remain within the confines of their authority when spending the principal’s money — and take care to document all the transactions they make using it — generally will not land in any kind of trouble for their actions.  

To put it simply, if an agent can prove how a financial transaction would benefit the principal, they likely can make it. If they are unsure whether a financial transaction would benefit the principal, it’s best they discuss the transaction with a qualified attorney before making it.  

Learn more about how an agent can legally take money from their principal’s accounts in the sections below.

When Does an Agent Need Court Approval to Make a Transaction?

When in doubt, an agent may be able to seek court approval before making a transaction using the principal’s money. This is one way to make absolutely certain that a transfer of money won’t result in an accusation of self-dealing.  

To obtain court approval, an agent must file a petition detailing the proposed transaction and their reasons for it. They also should attach any relevant documents that could help the court reach a determination.  

Keep in mind that not every transaction will require court approval; court approval generally should only be sought if the proposed transaction could have far-reaching effects. An example of a decision an agent may want to run by the court would be selling any of a principal’s real properties.

How Can an Attorney Help With Your Power of Attorney Case?

No matter which side of a power of attorney dispute you’re on, working with an attorney is highly recommended. From devising a winning strategy to having the skill set to compellingly present your case to the court, the right attorney can take the guesswork out of your case.  

Discover the ways an attorney can help with your power of attorney case from the following sections.

An Experienced Attorney Can Help the Principal

Signing a power of attorney can feel daunting. On the one hand, you may be getting the help you need to effectively manage your finances. On the other hand, you could be granting a bad actor full access to your financial accounts. 

By having an attorney in your corner, not only is a bad agent unlikely to get away with any misdeeds they perpetrate, but you can rest easy knowing your finances have another set of eyes on them. 

Some of the specific ways an attorney can help a principal include:  

  • Drafting a legally sound power of attorney document 
  • Investigating an agent’s actions  
  • Inspecting an agent’s accountings for red flags 
  • Proving power of attorney abuse  
  • Litigating on the principal’s behalf

Keep in mind that an attorney can also litigate on behalf of a principal’s loved ones if the principal is incapacitated, or on behalf of their estate or trust representative if they are deceased.

An Experienced Attorney Can Help the Attorney-in-Fact

Serving as an agent means taking on a lot of important responsibilities. Most agents will benefit from having a lawyer by their side guiding them as they navigate these responsibilities.

Some of the specific ways an attorney can help a power of attorney agent include:  

  • Interpreting the terms of the power of attorney document 
  • Explaining their duties to them  
  • Reviewing significant transactions they plan to make with the principal’s money Preparing accountings  
  • Defending claims of fiduciary misconduct

In taking on any complicated new role, it can help to have advice from a knowledgeable professional. Having a lawyer by your side can give you the peace of mind you need to take on your duties with confidence.

Have concerns about a power of attorney’s actions? We’re here to help.

Are you a power of attorney agent with questions about when you can and can’t use the principal’s money?  

Are you a loved one of a principal who you believe was financially exploited by their agent? 

Our attorneys at Keystone have experience working on a wide variety of power of attorney matters throughout California.  

Contact us today to tell us about your power of attorney-related issue. We look forward to speaking with you.

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