Yes, power of attorney agents can get paid, but payment is never automatic. Whether you are entitled to compensation depends on what the POA document says, and if it says nothing, on the default rule in your state. Family members serving as agents face an extra hurdle in some states: they cannot be paid at all unless the document specifically authorizes it.
Start With What the Document Says
The POA document is the controlling factor. A well-drafted power of attorney spells out the compensation arrangement directly. The principal can set a flat fee, an hourly rate, a percentage of assets under management, or any other structure that fits the situation. When the document is specific, there is little room for dispute.
Some documents go the other way and prohibit compensation outright. If the POA says the agent serves without pay, that controls no matter what state law would otherwise allow. The agent can still be reimbursed for out-of-pocket expenses, but not paid for their time.
The messiest scenario is also the most common: the document says nothing at all about pay. Many families draft a POA focused on granting authority without addressing whether the agent should be compensated. When that happens, state law fills the gap.
Default Rules When the POA Is Silent
Roughly 32 states have adopted some version of the Uniform Power of Attorney Act. In those states, the default rule is that an agent is entitled to reasonable compensation for services and reimbursement of expenses reasonably incurred on the principal’s behalf, unless the document says otherwise. The key word is “reasonable,” which leaves significant room for interpretation and, sometimes, for family disagreement.
Not every state follows the uniform act. A few states require agents to petition a court for approval of compensation if the POA doesn’t address it. Others presume the agent serves without pay unless the document affirmatively grants compensation. Any agent planning to take payment from a silent POA should check the specific rule in the state where they are acting before writing themselves a check.
Family Members Often Cannot Be Paid Without Explicit Authorization
This is where most people get tripped up. The majority of POA agents are family members, and some states treat family agents differently from professionals. Under certain versions of the Uniform Power of Attorney Act, an agent who is a spouse, parent, grandparent, or descendant of the principal is not entitled to compensation unless the POA document specifically authorizes it. The logic is that family members are presumed to be acting out of familial obligation rather than as hired professionals.
Consider a daughter who spends 20 hours a week managing her mother’s finances, paying bills, coordinating with doctors, and dealing with insurance. She may assume she can pay herself something for the effort. In a state with a family-member restriction, she cannot, unless her mother’s POA document explicitly says so. She can still be reimbursed for out-of-pocket expenses, but the time and labor go uncompensated.
If you are drafting a POA and want a family-member agent to be paid, the fix is simple: include a compensation clause. If you are already serving under a silent document, check your state’s rule before taking any payment.
What Counts as Reasonable Compensation
When an agent is entitled to pay but the document does not specify an amount, courts look at several factors to decide what “reasonable” means:
- Complexity of the duties. Paying a few monthly bills is far less demanding than managing an investment portfolio, running a business, or coordinating a real estate sale. More complex work justifies higher pay.
- Time and effort. An agent who spends two hours a month has a harder time justifying significant compensation than one dedicating 15 or 20 hours a week.
- Skill and expertise. An agent with a financial background who brings genuine expertise to asset management can reasonably charge more than someone with no relevant training.
- Size of the estate. Managing a $2 million portfolio carries more responsibility and risk than managing a $50,000 savings account, and compensation often scales with the value of assets under management.
- Local market rates. What professionals in the same area charge for similar work provides the most useful benchmark.
Professional fiduciaries who do this work for a living typically charge $200 to $275 per hour, based on published 2025 fee schedules. A non-professional family member should not expect to match those rates. Most guidance places a lay agent’s reasonable compensation well below professional rates, often in the range of $15 to $50 per hour, depending on the complexity of the work and local cost of living. When in doubt, aim low. Heirs who later challenge the amount are far more likely to succeed against an agent who paid themselves generously than one who was conservative.
Reimbursement Is Separate From Pay
Even agents who serve without compensation are entitled to reimbursement for money spent handling the principal’s affairs. Compensation pays the agent for their time. Reimbursement returns money the agent already spent out of pocket on the principal’s behalf. Confusing the two creates problems.
Common reimbursable expenses include mileage for travel to banks, medical facilities, or government offices; postage and shipping; copying and printing fees; and payments to accountants, attorneys, or financial advisors hired to assist with the principal’s affairs. The test is whether the expense was reasonable and genuinely incurred for the principal’s benefit, not the agent’s.
Documentation is the critical piece. Every expense needs a receipt, invoice, or other contemporaneous record. Keep a simple log noting the date, purpose, and amount of each expenditure. An agent who reimburses themselves from the principal’s account without documentation is inviting a court challenge from other family members.
Keep Records That Will Hold Up Later
Record-keeping is the single most important protection an agent has. If anyone later questions the amount you were paid, your records are your primary defense.
For compensation, maintain a detailed time log. Each entry should include the date, a description of the task performed, and the time spent. Something like “February 12, reviewed quarterly brokerage statement, called financial advisor about rebalancing, updated budget spreadsheet, 2.5 hours” is the kind of specificity that holds up. “February, various tasks, 10 hours” is not. Courts have denied compensation claims outright where agents could not produce time records or proof of the services provided.
For expenses, keep every receipt and organize them by month. A mileage log should record the date, destination, purpose, and miles driven. Bank and credit card statements are helpful supplements but do not replace individual receipts.
Beyond compensation and expenses, the agent has a broader duty to preserve records of every financial transaction conducted on the principal’s behalf. Bank statements, tax returns, investment account records, and correspondence with financial institutions should all be kept. If anyone with legal standing requests an accounting, you have to be able to produce one.
Extra Caution When the Principal Is Incapacitated
A durable power of attorney is designed to remain effective when the principal becomes mentally incapacitated. That is precisely when agents most need the authority, and also when the risk of abuse is highest, because the principal can no longer monitor what the agent is doing.
While the principal is competent, they can review compensation, approve or object to expenditures, and revoke the POA entirely. Once the principal loses capacity, those checks disappear, and courts and family members become the only remaining oversight. They tend to scrutinize an agent’s self-compensation more aggressively when the principal was incapacitated at the time.
If the POA is unclear about compensation and the principal can no longer clarify their wishes, the safest approach is to seek court approval before taking any payment. It costs time and filing fees, but it creates a court order that protects you from later challenges. Agents who unilaterally set their own pay while the principal is incapacitated are in a vulnerable position, especially if other family members disagree.
What Happens if an Agent Takes Too Much
Taking excessive compensation is a breach of fiduciary duty, and the consequences are serious. Any interested party, including family members, other heirs, or a court-appointed guardian, can petition a court to review the agent’s conduct. Courts can order the agent to return excess compensation, reduce or eliminate future pay, compel a full accounting, suspend or remove the agent, appoint a replacement, and void transactions the agent made. The agent can also be held liable for any profit made through the breach, plus attorney’s fees and court costs.
A provision in the POA that purports to shield the agent from liability will not protect against dishonest behavior or self-dealing. Courts will not enforce an exculpatory clause if the agent acted dishonestly, with improper motive, or with reckless indifference to the principal’s interests. In the worst cases, taking unauthorized or excessive compensation can constitute financial exploitation of a vulnerable adult, which carries criminal penalties in most states.
Taxes on Agent Compensation
Agent compensation is taxable income. The IRS treats fees for services as income that must be reported on the agent’s personal tax return, and POA agent compensation is no exception.1Internal Revenue Service. Publication 525 (2025), Taxable and Nontaxable Income
Reporting and the 1099-NEC
If an agent receives $600 or more in compensation during a tax year, the principal or their estate should issue a Form 1099-NEC reporting the payment to the IRS.2Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC (04/2025) Even if the payment falls below that threshold and no 1099 is issued, the agent still has to report the income. The $600 threshold triggers the reporting obligation for the payer, not taxability for the recipient.
Self-Employment Tax
This is the part many agents miss. Because a POA agent is not an employee, compensation is generally treated as self-employment income. That means the agent owes self-employment tax on top of regular income tax. The self-employment tax rate is 15.3%, covering Social Security (12.4%) and Medicare (2.9%).3Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes) An agent who nets $5,000 for the year and budgets only for income tax will be surprised by an additional $765 in self-employment tax.
Effect on Social Security Benefits
For agents already receiving Social Security retirement benefits, compensation adds another wrinkle. If you have not yet reached full retirement age, the Social Security Administration counts wages and net self-employment income against the annual earnings limit. For 2026, that limit is $24,480 if you are under full retirement age for the entire year, and $65,160 for the months before you reach full retirement age during that year.4Social Security Administration. Receiving Benefits While Working Earnings above those limits reduce your benefit by $1 for every $2 over the lower threshold, or $1 for every $3 over the higher one. Once you pass full retirement age, the limit no longer applies.
Reimbursements Are Not Taxable
Expense reimbursements are treated differently. When an agent spends their own money on the principal’s behalf and is later repaid, that repayment is not income. The agent is simply being made whole. The requirement is that the reimbursement matches actual documented expenses. If an agent receives more than they actually spent, the excess is taxable. Detailed records of every expense protect both the agent and the principal at tax time.