Can a Power of Attorney Take Money?

By Cindy DeRuyter, J.D.

Can a Power of Attorney Take Money?

By Cindy DeRuyter, J.D.

When you appoint an agent as your attorney-in-fact under a power of attorney, you control what types of financial activities and transactions you want them to handle on your behalf. In some states, if state law and the power of attorney document authorize it, people acting under power of attorney may claim reasonable compensation for their services. In such cases, the attorney-in-fact must have documentation of time spent and actions taken to justify the compensation they claim.

Person using a pen to sign documents

Benefits of Creating a Power of Attorney

A power of attorney is a common estate planning tool. When someone has power of attorney over a friend or family member's affairs, they can avoid the need for costly and time-consuming conservatorship proceedings in the event incapacity strikes their loved one. If you create a durable power of attorney and later become incapacitated, your named attorney-in-fact can still handle your financial affairs on your behalf without going to court.

You can name any competent adult as your attorney-in-fact under a power of attorney. People frequently name spouses, adult children, siblings, friends, and others in this role. There are also professional companies and individuals who act as your attorney-in-fact in exchange for negotiated fees.

Attorney-in-Fact's Authority and Responsibility

Regardless of who you name as your attorney-in-fact, they are a "fiduciary." That means the attorney-in-fact is held to a higher legal standard and must act in your best interest at all times. You choose what powers you want your attorney-in-fact to have. You can limit authority to one or more types of transactions, such as real estate and banking, or you can grant broad authority so your attorney-in-fact can handle any type of financial matter.

If your state has enacted the Uniform Power of Attorney Act, you designate on the form whether you want to allow your attorney-in-fact to make gifts to him or herself, or otherwise transfer assets into their own name while acting on your behalf. Your state's statutory power of attorney form may allow you to extend this authority to one attorney-in-fact while withholding it from another.

Risks Related to Attorney-in-Fact's Abuse of Power

When you give power of attorney to a competent, responsible, and trustworthy person, it's easier for your loved ones to manage your affairs if you become unable to take care of paying your bills and handling other financial matters. However, in the wrong hands, power of attorney is dangerous.

If your attorney-in-fact exceeds their authority under the form by acting in their own best interests or taking compensation they are not entitled to receive, it's a crime. You can limit your risk by choosing your attorney-in-fact carefully, making thoughtful decisions about what types of transactions they can handle, and being deliberate about authorizing or disallowing compensation for your attorney-in-fact's service.

Power of attorney laws are not the same in every state. When in doubt, consult with an elder law or estate planning attorney who can help you understand your state's laws about compensation for attorneys-in-fact.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.

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