We see this practice when we represent trustees, conservators and other fiduciaries, and we always counsel against it. A trustee, for instance, might pay trust bills from their own funds and then make a reimbursement to themselves as fiduciary.
It can seem simple and unobjectionable. The person handling another’s financial affairs pays for something themselves, or puts it on their own personal credit card. Then they make reimbursement to themselves as fiduciary, and make a note documenting the transaction.
Yes, it’s permissible. Even if you file the accounting with a court, they are likely to approve it. But it’s still a bad practice.
As we discuss in this week’s podcast episode, a fiduciary needs to keep meticulous records. When the fiduciary writes checks to themself it is automatically suspect. Unless each transaction is thoroughly documented, the likelihood that someone may object increases.
In the real world we find that recordkeeping is often spotty. You may be able to total up all the transactions and show that the reimbursements are justified, but a skeptical observer may find the paper trail inadequate. It’s easier — and safer — to simply avoid the conflict and make payments directly to vendors. When you use a credit card, pay the credit card bill directly rather than writing a reimbursement to the fiduciary. Help keep the transactions clear.