Power of Attorney
Your Responsibility As An Agent Under Power of Attorney
If you have been appointed as an agent, or “attorney-in-fact,” under a power of attorney, you have certain duties, responsibilities and powers of which you should be aware. You have been appointed to represent the “principal” with respect to his or her affairs. In effect, you step into the principal’s shoes to make any decision the principal would have made were he or she able as detailed in the actual document. Subject to any limitations placed in the power of attorney, you can open bank accounts, withdraw funds from accounts, deal in stocks and bonds, pay bills, deal with insurance, cash checks, invest in and sell real estate. All steps you take must be consistent with your role as a “fiduciary.” This means that you will be held to the highest standards of good faith, fair dealing, and undivided loyalty with respect to the principal. You must always act in his or her best interest and keep the principal’s goals and wishes in mind in making any discretionary decision.
Liability For Your Action As Attorney-In-Fact
You can be held liable to the principal if you act outside of the scope of the power of attorney, or with willful misconduct or gross negligence. You can also be held liable to third parties if your action is outside of the scope of the power of attorney or you fail to identify your representative capacity. If you do your best and keep the principal’s interests in mind as the basis of your actions, you should not incur any personal liability. Always sign in the following manner: “John Doe by Jane Doe, Attorney in Fact”. Some persons prefer to abbreviate by signing, “John Doe by Jane Doe, POA”. This format is also acceptable. It is very important that you keep good records of your actions under the power of attorney. That is the best way to be able to answer any questions anyone may raise. The most important rule to keep in mind is not to co-mingle the funds you are managing with your own money. Keep the accounts separate. With a checking account, the checks will act as receipts and the checkbook register as a running record of your expenditures on behalf of the principal.
When Does The Power Of Attorney Take Effect And When Does It End?
The power of attorney takes effect as soon as it is signed by the principal or when the principal becomes incapacitated. In most cases, even when the power of attorney is immediately effective, the principal does not intend for it to be used until he or she becomes incapacitated. You should discuss this with the principal so that you know and can carry out his or her wishes.
Also, remember, while a power of attorney is effective during the principal’s incapacity, it terminates at the principal’s death. The power of attorney also ends if it is revoked by the principal. Documents we prepare for our clients carry a reminder that the power of attorney in no way limits the principal’s own decision making authority with regard to any of the powers and responsibilities enumerated in the document.