Your aging father (or mother) has given you power of attorney to help them handle their finances. You have decided to accept this awesome responsibility. The time has come for you to step in and start acting on their behalf. Before you begin, you should consider the legal duties involved when you serve as someone’s power of attorney.
This article is intended to help you better understand and meet those responsibilities.
First, some terminology. The person who gave you power of attorney is generally referred to as the “Principal.” The person who is acting on behalf of the Principal is called the “Agent” or “Attorney in Fact” (that’s you). As Agent you are acting as a “fiduciary.” A fiduciary is a person who has the responsibility for managing the money and property owned by another. The term fiduciary comes from the Latin word fiducia, meaning “trust.” Other examples of fiduciaries include Trustees, Guardians, and Executors.
As a fiduciary you have the highest legal responsibility to be faithful to the interests of your Principal. Your job is to act to protect and safeguard and benefit your Principal. You may not put your personal interests ahead of your duties to the Principal.
Mississippi law requires that, unless the power of attorney document specifically varies these duties, you must exercise the powers for the benefit of the Principal; keep the assets of the Principal separate from your own; exercise reasonable caution and prudence; and keep a full and accurate record of all actions you take on behalf of the principal including income and assets you receive and disbursements you make.
Being someone’s Agent is serious business. Here are some rules you should follow to keep out of trouble.
1. You must act prudently and reasonably in all actions you take in your role as Agent.
2. Unless otherwise specified in the Power of Attorney, you should avoid all conflicts of interest. Your responsibility is to act in the best interest of the person who signed the document and who has invested this trust in you.
3. You must respect the terms of the document. If you are not given authority to undertake a particular action, you should assume that you cannot take that action. If you identify any ambiguities in the document or if you are uncertain, you should consult with an experienced lawyer. Also, be sure to note any limitations or restrictions on your powers.
4. Unless you are specifically authorized to do so by the Power of Attorney, none of the Principal’s assets should ever be placed in your name. Be sure that none of your assets are mixed with those of the Principal.
5. If you execute any documents on behalf of the Principal, you should specifically indicate that you are acting as the “Agent” for the Principal, and not on your own behalf. For example, you can sign “Howard Jones, as Agent for Rachel Wilson” or “Howard Jones, POA for Rachel Wilson.” In these examples, Howard Jones in the Agent and Rachel Wilson is the Principal.
6. You should maintain careful and complete records of all steps you take on behalf of the Principal. It is important that you retain receipts and maintain good records of all checks written, other disbursements made, all liabilities of the Principal with which you have involvement or knowledge, all income and other assets you receive, and all actions you take on behalf of the Principal. The maintenance of such records minimizes the possibility that you will be exposed to liability.
7. You have the right to reasonable compensation for your services. If you decide to claim compensation, you should be sure to maintain careful records indicating how much you have been paid and the documentation that justifies such compensation.
8. Maintain close communication with the Principal. Even if there has been a determination that the Principal is incapacitated, make your best efforts to talk with the Principal about the actions you are taking. You may also need to talk with the Principal’s family members, physician, professional advisors, and other interested persons on the Principal’s behalf.
If ever you are acting as an Agent and are not sure you are doing the right thing, seek out professional advice not only to protect the Principal, but to protect yourself.
For help with drafting or administering a power of attorney, call Courtney Elder Law Associates today at 601-987-3000 or 866-ELDERLAW.