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.