A power of attorney is a document that gives someone else (the agent) the power to act on behalf of the person who prepared the document (the principal). Such a document becomes important in a number of contexts, but it is particularly important with incapacity planning.
A power of attorney gives the agent authority over some or all of the principal’s assets and financial affairs if and when they become incapacitated. This is no small matter. It is important that the power of attorney specifically spell out the limits of the agent’s authority in terms of what kinds of transactions or matters they can take charge of.
Regardless of the specific powers bestowed in a power of attorney, every agent has certain fundamental responsibilities and duties. These include:
- Acting in the principal’s best interest at all times.An agent is a fiduciary. Being a fiduciary means that the agent’s prime directive is that they must always act in the principal’s best interests when it comes to decisions and acts involving their assets. The agent is managing these assets for principal’s benefit, not their own. Any decisions that could be seen as self-dealing or self-interested can get an agent in a whole heap of trouble and is a betrayal of the principal’s trust.
- Acting carefully and responsibly.Fiduciary duties also include managing the principal’s assets with the utmost caution and responsibility. An agent might be responsible for paying bills, overseeing bank accounts, making investments, providing for the principal’s necessities and well-being and any other duties contained in the power of attorney.
- Keeping the principal’s assets separate.One of the biggest mistakes that an agent can make is comingling the assets and funds of the principal with their own or other assets. The agent must keep separate accounts, never deposit funds or property into an account in their own name, avoid joint accounts, keep title to the principal’s property and funds in their own name, and pay any of the principal’s expenses with their funds, not the agent’s.
- Keeping thorough records.The agent should maintain records in such a manner that if anyone wanted to get a full picture of the assets and funds under your care, they could do so quickly and easily.
- Getting the help of an experienced estate administration attorney.As trustworthy and competent as an agent may be, managing a complex portfolio of assets can be a complicated undertaking. Agents frequently involve professionals such as lawyers, accountants, tax professionals, and others to assist them in carrying out their fiduciary responsibilities.
Southwest Florida Estate Planning, PLLC – Planning for Life
I’m attorney Ed Smith. As an experienced and innovative estate planning and elder law attorney, I work with individuals and families to develop personally tailored estate plans and arrangements for seniors that bring comfort, clarity, and peace of mind.
If you would like to discuss your questions, concerns, or goals involving your estate plan, please give Southwest Florida Estate Planning, PLLC a call at (239) 216-4107 or fill out our online form. We look forward to assisting you.