How Does Power of Attorney Work?

How does a power of attorney work
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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.

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 power of attorney 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 power.

A general power of attorney is a type of durable power of attorney (the other two are special power of attorney and healthcare or medical power of attorney). An agent may make just about any decisions on your behalf with this document while the power of attorney assignment remains valid. However, even a general power of attorney has limits.

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

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

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

A grantee can only give this authority to an agent if they are 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?”