Being named as an Agent under a Power of Attorney (POA) is both an honor and a significant responsibility. Whether you’ve been appointed to manage someone’s financial affairs, healthcare decisions, or both, it’s essential to understand your duties and the scope of your authority.
If a family member or friend has named you as their Agent, this article is for you. Let’s walk through what you need to know so that you can carry out your duties properly.
Who’s Who?
Before diving in, let’s get our terminology squared away.
A Power of Attorney is an agency relationship. There are two parties in this relationship: Agent and Principal.
The Agent, also known as an attorney-in-fact, is someone to whom another person delegates certain responsibilities.
The Principal is the one who delegates responsibilities to the Agent.
There are typically two types of Powers of Attorney: Property and Healthcare. These documents are important for all adults to have, regardless of age.
A Fiduciary Responsibility: What It Means and Why It Matters
As an Agent under any type of Power of Attorney, you hold what’s called a fiduciary duty. This means you are legally obligated to act in the best interests of the person who appointed you as their Agent.
Adhering to your fiduciary duties means that you will act in the following manner:
- Loyally. You must prioritize the Principal’s interests above your own and not use the position to your own benefit.
- Carefully. You must act prudently and make thoughtful, informed decisions based on what you know the Principal’s wishes and values are.
- Honestly. You must keep the Principal fully informed and avoiding conflicts of interest.
- Accountably. You must maintain accurate records of all transactions and decisions that you make on the Principal’s behalf.
Other types of fiduciary positions include Executor and Trustee. Executors handle probate estates and Trustees handle Trusts.
Your attorney is also a fiduciary, meaning that he or she must advise you according to what is in your best interests, not the attorney’s interests.
Failing to meet these standards can result in legal liability. So it’s crucial to take the role seriously.
Acting as Agent Under a Power of Attorney for Property
If you’ve been appointed under a Power of Attorney for Property, your responsibilities may include:
- Managing Bank Accounts. This includes paying the Principal’s bills, depositing checks, and overseeing financial transactions.
- Handling Investments. You may need to manage stocks, bonds, and other assets in a way that aligns with the Principal’s investment strategy and risk tolerance.
- Real Estate Management. If the Principal owns real estate, you need to maintain the property as instructed in the POA document, including making mortgage, insurance, and tax payments.
- Filing Taxes. If the Principal cannot act on his or her own, you may have to step in and file returns correctly and on time.
- Keeping Records. Documenting all financial decisions and maintaining receipts, statements, and correspondence.
- Handling Legal Matters. A thoroughly drafted POA may also include authority to handle claims and litigation on the Principal’s behalf.
- Operating a Business. If the Principal owns a business, you may have to step in an manage the business if he or she is incapacitated.
It’s important to carefully review the Power of Attorney document to understand the scope of your authority and any limitations.
If the document states that the Agent cannot take a certain action and you do, you could be personally responsible for fixing the situation.
Acting as Agent Under a Power of Attorney for Healthcare
When acting under a Power of Attorney for Healthcare, your duties focus on the Principal’s medical care and well-being. These responsibilities can include:
- Making Medical Decisions. You may need to consent to or refuse certain types of treatment based on the Principal’s wishes.
- Communicating with Healthcare Providers. As Agent, you also need to communicate with doctors, nurses, and other providers about the Principal’s health situation and available treatment options.
- Accessing Medical Records. Especially in complex situations, you may have to obtain medical records for other providers as part of the course of treatment.
- Deciding on Long-Term Care. If the Principal is elderly and unable to care for him or herself, you may have to assist with selection of nursing home, assisted living facility, or home care arrangements.
- End-of-Life Decisions. If the Principal is in permanent vegetative state, you could have to carry out the decisions laid out in the Principal’s Living Will or Advance Healthcare Directive.
Just like with a POA for Property, it’s essential to follow the instructions laid out in the document and always act in the Principal’s best interest.
It behooves you to have a conversation with the Principal now to make sure you understand his or her values well before you may need to act.
What to Do Now
Now that you have an idea of what your responsibilities are, this is where it’s important to review the Power of Attorney document carefully.
If you don’t have one already, get a copy of the POA document. Not having a copy of the document is a common error with POAs. A POA does no good if you as the Agent do not have a copy of the document on hand.
Ask the Principal to send you a complete copy of the POA document. We advise at least having a version in PDF format, but a hard copy can also be good as long as you keep it in a secure place.
Read through all the provisions. See what powers the Principal granted to you, and what any limitations are. Also determine if the POA is effective immediately, or if it only comes into effect upon certain conditions being met.
The bottom line is to do your research ahead of time and ask questions of the Principal while he or she can still answer them.
Legal Guidance for Agents
Serving as an Agent under a Power of Attorney can be complex and sometimes overwhelming. Especially if you’re suddenly thrust into a situation where you have to act. But whether you’re managing finances, healthcare, or both, you don’t have to navigate it alone.
Connell Law is here to help you understand your role, avoid common pitfalls, and carry out your duties with confidence. We prepare Powers of Attorney, but can also provide you with guidance on how to do the job well.
We primarily serve Rutherford County and the surrounding area with estate planning, probate, and small business legal services. Reach out to us today to request a consultation.
