Can a Power of Attorney Transfer Money to Themselves?

Whether a Power of Attorney (POA) can transfer money to themselves depends on the specific powers granted in the POA document and the laws of the state or territory in which it is being used. 

Generally, a person who holds a POA, known as an attorney, is expected to act in the best interests of the principal (the person who granted the POA).

If the POA document explicitly permits the attorney to transfer money to themselves, perhaps for reimbursement of expenses incurred while managing the principal’s affairs, then it may be allowed. However, such transactions should be transparent and well-documented to avoid any implications of misuse or abuse of power.

Does a power of attorney need express permission to transfer funds to their own account?

A power of attorney generally needs express permission to transfer funds to their own account. This means that the power of attorney document should explicitly state that the attorney is allowed to make gifts or loans to themselves.

However, there are some exceptions:

• Implied Authority: If the power of attorney document is broadly worded and gives the attorney general financial authority, they may be able to argue that they have implied authority to transfer funds to themselves if it is in the best interest of the principal. However, this is a complex area of law, and it is always best to seek legal advice if there is any doubt.
• Acting in the Principal’s Best Interest: Even without express permission, a power of attorney may be able to transfer funds to themselves if it is clearly in the best interest of the principal. For example, if the principal is unable to manage their own finances and the attorney needs to pay for essential expenses on their behalf, they may be able to transfer funds to their own account to do so. However, it is important to document all such transactions carefully and to be able to justify why the transfer was necessary.

What are the legal risks of a power of attorney transferring money to themselves?

A power of attorney (POA) who transfers money to themselves without proper authorisation or justification faces several legal risks:

1. Breach of Fiduciary Duty: POAs have a fiduciary duty to act in the best interests of the principal. Transferring money to themselves for personal gain without authorisation is a clear breach of this duty.
2. Civil Liability: The POA can be held personally liable for any financial losses suffered by the principal due to the unauthorised transfer. They may be sued for damages, and a court could order them to repay the misappropriated funds.
3. Criminal Charges: In some cases, the POA’s actions could be considered fraud or theft. If convicted, they could face fines and even imprisonment.
4. Removal as Attorney: The principal or their family can apply to the relevant tribunal or court to have the POA removed from their position.
5. Freezing of Assets: A court may freeze the POA’s assets to prevent them from dissipating funds that rightfully belong to the principal.
6. Reputational Damage: Even if the POA is not criminally charged or found civilly liable, their actions could damage their reputation and make it difficult for them to act as a POA in the future.

The specific legal risks depend on the circumstances of the case, such as the amount of money transferred, the reason for the transfer, and whether the POA acted dishonestly. However, the potential consequences are severe, and POAs should always exercise caution when dealing with the principal’s finances.

Also read: How to Give Power of Attorney From Abroad That Would Be Valid in Australia

How can I report a power of attorney for misusing funds in Qld?

In Queensland (QLD), you have several options to report a power of attorney for misusing funds:

1. Adult Guardian: The Adult Guardian is a statutory authority responsible for protecting the rights and interests of adults with impaired decision-making capacity. They can investigate complaints about the misuse of enduring powers of attorney and take action if necessary, such as revoking the power of attorney or seeking compensation for the principal.
2. Queensland Police Service: If the misuse of funds is significant or involves fraud, you can report it to the police. They can investigate and potentially press criminal charges.
3. Elder Abuse Helpline: If the principal is an older person, you can contact the Elder Abuse Helpline (1800 353 374). They can provide advice and support, and connect you with relevant services.
4. Public Trustee of Queensland: The Public Trustee can provide information and advice about enduring powers of attorney, and can also investigate complaints about their misuse.
5. Legal Aid Queensland: If you need legal assistance, you can contact Legal Aid Queensland. They can provide advice and representation for eligible individuals.
6. Seek Legal Advice: It is always recommended to consult with a lawyer specialising in power of attorney. They can assess the situation, advise you on the best course of action, and represent you in legal proceedings if necessary.

Before reporting, gather any evidence you have of the misuse of funds, such as bank statements, receipts, or correspondence. This will help support your case.

Remember, reporting a power of attorney for misusing funds is crucial to protecting the vulnerable and ensuring accountability.

Protecting a client’s inheritance

Our client approached Walker Pender Group with concerns regarding his father’s estate. His father’s second wife, acting as power of attorney (POA), had transferred significant assets to herself, claiming verbal instructions from the deceased that contradicted the existing will.

Despite the will clearly outlining the distribution of assets to the children, the POA refused to comply. Our firm meticulously reviewed the will, collected evidence of the unauthorised transfers, and guided the client in reporting the POA’s misconduct to the relevant authorities. We ensured the client’s rights were protected and initiated legal action to challenge the POA’s actions and reclaim the misappropriated assets.

Protect your assets and safeguard your future with Walker Pender

Don’t let uncertainty surrounding Powers of Attorney put your financial well-being at risk. Walker Pender provides expert legal guidance on the rights and responsibilities of all parties involved.

Take the first step towards peace of mind. Contact Walker Pender today for a consultation.