Power of Attorney
Your Responsibility As An Agent Under Power of Attorney
If you have been named as someone’s agent and given power of attorney for them, you have certain obligations and options of which you should be aware. Being named as someone’s power of attorney, as they are the principal, you are their representative who can make decisions in their personal, medical and financial matters. As the power of attorney, or “attorney-in-fact,” 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.
It may be possible for you to take many financial actions on behalf of the principal, including opening and withdrawing funds from bank accounts, trade stock, deal in stocks and bonds, make bill payments, deal with insurance, cash checks, invest in and sell real estate. Any actions in which you engage must be allowed within your role, sometimes referred to as your fiduciary duty. You are expected to act in a manner consistent with keeping the best interests of the principal in mind while making decisions that are fair and in good faith beneficial for the principal.
Liability For Your Action As Attorney-In-Fact
You will be held responsible if actions taken are not allowable under the power of attorney. Additional legal action may be taken against you if you act with intentional misconduct or extreme 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.
While you hold power of attorney, keeping detailed records of transactions and any other actions is essential. Having documentation and being able to show why you did something helps explain the situation in the event questions are raised by others.
It is also important to keep your own funds and transactions separate from the principal’s. All accounts should be separate, and you can retain receipts, check registers and cancelled checks as evidence of any expenditures on the principal’s behalf that came from your own account.
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.