A power of attorney can transfer the principal’s money to themselves only in narrow circumstances: when the POA document explicitly authorizes the transfer, when the agent is taking reasonable compensation for their services, or when they are reimbursing themselves for documented out-of-pocket expenses. Any other movement of the principal’s money into the agent’s own pocket is self-dealing, and self-dealing is a breach of the fiduciary duty every agent owes. The consequences range from court-ordered repayment to criminal prosecution for theft or embezzlement.
The reason the rules are this tight is that a POA is built entirely on trust. Courts treat any agent who profits from that relationship with heavy skepticism, and when an agent benefits from a transaction involving the principal’s assets, most courts presume the transaction was the product of fraud or undue influence. The burden then shifts to the agent to prove, by clear and convincing evidence, that what they did was fair and in the principal’s best interest.
The Three Legitimate Ways an Agent Can Receive the Principal’s Money
Authorized Gifts
An agent can gift the principal’s money to themselves only if the POA document expressly grants gift-making authority. Under the Uniform Power of Attorney Act framework, which roughly 31 states and the District of Columbia have adopted, a general grant of financial authority is not enough. The document has to specifically say the agent can make gifts.
Even then, defaults kick in. In UPOAA states, gifts are capped at the federal annual gift tax exclusion per recipient, which is $19,000 for 2026, unless the document authorizes larger amounts. And unless the POA says otherwise, an agent who is not the principal’s ancestor, spouse, or descendant cannot make gifts to themselves at all, or to anyone they are legally obligated to support. Family agents get more latitude on paper, but not much in practice: courts in most states presume that a gift an agent makes to themselves was not in the principal’s best interest, and the agent has to prove otherwise.
Reasonable Compensation
Most states allow an agent to pay themselves reasonable compensation for their work unless the POA specifically prohibits it. What counts as reasonable depends on the complexity of the tasks, the hours involved, the agent’s skill level, and what professional fiduciaries in the area charge for similar work. An agent who spends dozens of hours managing an investment portfolio and coordinating with a tax preparer has a much stronger claim than one who writes a few checks a month.
The word doing the work here is “reasonable.” An agent who pays themselves $5,000 a month to manage a modest bank account will struggle to defend that number in front of a judge. Document every hour and every task. If you are not sure whether your rate is defensible, look at what professional fiduciaries in your area charge, or ask an attorney before you take anything.
Expense Reimbursement
An agent can reimburse themselves for legitimate out-of-pocket expenses incurred while acting for the principal: tax preparation fees paid personally, supplies bought for the principal’s home, filing fees, and similar costs. Keep every receipt. The moment documentation disappears, a reimbursement starts looking like an unauthorized transfer.
What Counts as Self-Dealing
Self-dealing is any transaction where the agent uses the position to benefit themselves at the principal’s expense. The obvious versions are easy to identify: using the principal’s card for personal purchases, writing yourself unauthorized checks, or transferring the principal’s real estate into your own name. Less obvious moves get agents into just as much trouble.
- Buying the principal’s property or assets at below-market prices, even with a promise to pay the difference later.
- Making gifts from the principal’s money to your own children, spouse, or friends because you believe the principal would have wanted it.
- Depositing the principal’s funds into your own account, even briefly, or using a joint account in a way that muddles who owns what.
- Paying yourself compensation that outstrips the actual services performed, especially without any record of the work.
Even broad authority in a POA does not override the fiduciary duty. An agent with sweeping financial powers still cannot use those powers for personal gain unless the document says so in clear, specific language.
What Happens if an Agent Takes Money They Weren’t Entitled To
A Demand for an Accounting
Under the Uniform Power of Attorney Act, the principal, a guardian, a conservator, another fiduciary acting for the principal, or adult protective services can demand that the agent produce a full accounting of every transaction. After the principal’s death, the personal representative of the estate has the same right. Once a proper request is made, the agent generally must comply within 30 days. Agents who cannot produce records are already in serious trouble with any court that later reviews the case; courts have suspended agents and ordered repayment of tens of thousands of dollars simply because the agent could not document where the money went.
Court Orders and Civil Liability
Interested parties can petition a court to void unauthorized transfers, order the return of misappropriated property, revoke the agent’s authority, and appoint a temporary guardian or conservator to protect the remaining assets. A separate breach of fiduciary duty lawsuit can pursue the return of misappropriated funds plus damages. Many states have enhanced penalties under elder financial abuse statutes, which may allow additional damages, attorney’s fees, or both, and often carry lower proof thresholds than standard fraud claims.
Criminal Prosecution
When the conduct rises to intentional theft, the agent can face charges for fraud, theft, or embezzlement, with fines, restitution, and prison time on the table. Because the theft occurred inside a fiduciary relationship, many states treat it as a more serious offense than ordinary theft.
Even Authorized Gifts Can Backfire
An agent authorized to make gifts still has to think about tax and benefits consequences as part of the fiduciary duty. Two traps come up constantly.
The first is federal gift tax. The IRS allows up to $19,000 per recipient in 2026 without triggering a gift tax return. Gifts above that eat into the principal’s lifetime gift and estate tax exemption and can create real tax liability for the estate.
The second is Medicaid. When someone applies for Medicaid to cover nursing home care, the state reviews all asset transfers made during the previous 60 months. Gifts or below-market transfers within that window can trigger a penalty period during which Medicaid will not pay for care. The penalty length depends on the total value transferred and the average cost of nursing home care in the state, and there is no cap on how long it can run. An agent who makes gifts, even gifts the POA authorizes, can disqualify the principal from Medicaid at exactly the moment coverage is needed. If long-term care is on the horizon within five years, talk to an elder law attorney before making any gift.
If You’re Watching Someone Else Take the Money
If you suspect an agent is transferring the principal’s money without authorization, the tools above are available to you if you qualify as an interested party. Start with a demand for an accounting; the agent’s response, or lack of one, often tells you where the case is going. From there, a petition to the court can void transfers, remove the agent, and protect what’s left.
Move quickly. By the time the money is spent, recovery becomes far harder, and elder financial abuse cases often turn on how fast someone outside the situation raised the alarm. An elder law attorney or your state’s adult protective services agency is the right first call.