The person you name as power of attorney is generally prohibited from self-gifting unless you specifically authorize the person to make gifts to themselves in the POA document. This question comes up frequently, but the answer is usually straightforward once you read the language in the POA document. If your POA, also known as your “agent”, gifts money to themselves without permission to do so, is a “breach of fiduciary duty” and the agent can be held financially liable in court and removed from serving as your POA.
There is an exception, and that is where the power of attorney gives your agent permission to self-gift. Sometimes it is appropriate to permit your agent to make gifts of your money. For example, you may wish to give your spouse permission to move assets from your name to their name as part of a Medicaid planning strategy to protect assets from nursing home costs.
If you are supporting an adult child, Pennsylvania law allows you to grant permission in the document for your agent to provide “family support and maintenance.” This power can be used by your agent to transfer money to themselves for the purposes of support and education, after first considering your needs. An estate planning attorney can limit this authority, or omit it from your POA document entirely, as you prefer.
Likewise, you may wish for your agent to continue an established pattern of annual gifting. For example, if you have made holiday gifts each year to your children, and become incapacitated, you may wish to permit your agent to continue making those annual gifts. If your agent is one of your children, then the agent can make gifts to themselves only if your power of attorney document gives the agent specific permission to do so.
If your POA does not specifically grant permission to make gifts, the agent has no legal authority to make ANY gifts of your assets, even normal holiday, or birthday gifts. Your POA has a legal duty to act in your best interests, and giving away your money to others or self-gifting is often not in your best interests. You control what permission is included or excluded from your POA document with respect to gifting.
Your agent also has a duty to act in good faith and in accordance with your reasonable expectations. Your agent must generally attempt to maintain your estate plan pursuant to several factors set forth in Pennsylvania’s power of attorney statute. For example, even if the power of attorney permits self-gifting, it would be a violation of your agent’s legal duties to transfer assets to themselves leaving you with nothing without thinking about your needs, tax considerations, or planning to secure public benefits such as Medicaid long-term care benefits. You can be specific in your POA document in this regard and can prohibit your POA from being able to legally transfer money to themselves.
Our office can draft your power of attorney document in a way that can limit gifting and make your agent accountable to third parties. If you wish to have our office help you with your estate planning documents, including preparation of your will, financial POA, healthcare POA, and possibly a trust if appropriate for your situation, please call or contact us through this website.
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Disclaimer: We recommend that you receive ongoing legal advice from an elder law attorney before attempting to make any asset transfers or gifts for estate planning or Medicaid planning purposes. If you wish to secure our services, please contact us.
