What Are My Responsibilities Under a Power of Attorney?

What Are My Responsibilities Under a Power of Attorney?

If you have been named as an agent for a loved one under a power of attorney, you have some new legal responsibilities. A power of attorney is a legal document naming another party as an agent – someone who has the legal right to make decisions about money and property on behalf of the person who executed the power of attorney. This agent is also called a fiduciary. There are several types of powers of attorney, ranging from those covering a single transaction, i.e., a wife might sign residential closing documents on behalf of a husband who is unable to attend closing, to an elderly parent worried about becoming unable to care for him or herself. Each power of attorney should specify when the document goes into effect and what responsibilities are covered under the document.

If your father (for example) has named you as his agent, and he has reached the point where he is not able to make decisions by himself any longer, it becomes your job to act on his behalf. You have four primary responsibilities under the power of attorney:

  1. You must act in your father’s best interests. The power of attorney may outline exactly what role he wants you to play. Make sure you read it carefully. If your father is still able to help, it is a good idea to involve him in decision-making.
  2. You must maintain your father’s money and property separately from yours. You do not want there to be any question about your intentions or actions. Money belonging to him should go into accounts in his name, and expenses for his property or care should be paid from his accounts. If you pay for an expense and reimburse yourself, do so with a paper trail (keep the receipts, write down an explanation of what they were for, and write yourself a check from your father’s account to cover that amount).
  3. Carefully manage your father’s money and property. Understand what assets and liabilities your father has. Use caution investing his money, and make sure bills are paid. If he owns property, make sure the property is kept up and taxes paid on time. Decisions you make regarding the money and property should benefit your father. Be careful of making decisions when a conflict of interest may arise.
  4. Document everything you do. You should keep a clear paper trail with all receipts and statements. If another relative (or the government) questions your actions, you need to be able to document the state of all monies or property. This is especially important if your father may need to apply for Medicaid in the future. Medicaid requires proof the individual has limited assets, and they will investigate what has happened to your father’s assets.

In short, becoming a fiduciary is a big responsibility. Act ethically and in the best interest of the person who named you as agent. Keep good records and work to ensure you treat the person’s money and property as well (or better) than you treat your own. If you have questions about your fiduciary responsibilities, you may wish to speak with an attorney in North Carolina or in whichever state your responsibilities lie.

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