Acting as an agent under a Power of Attorney (POA) gives you the authority to make financial decisions on behalf of someone else. When someone wants to provide you with authority to act under their POA, regardless of their reasoning, you must take the time to learn about your scope of responsibility and duties. You will have legal obligations and must be accountable for your decisions. Mismanagement, poor recordkeeping, or exceeding your authority will lead to legal complications and disputes for you and the person you represent.
The Role of the Agent Who Holds A Power of Attorney
Acting as an agent under a POA means acting in the principal’s best interests. (The principal is the person granting the authority.) Your responsibilities include:
- Managing their assets
- Keeping their funds separate from yours
- Maintaining accurate records of every transaction or decision made on their behalf.
Your duty as agent requires you to exercise reasonable caution and make decisions that benefit the person you represent. Courts take these obligations seriously, and violations can result in significant penalties.
Agents must account for their actions if the principal, heirs, or a court requests documentation. This may include producing receipts, bank statements, or other documentation to explain financial decisions. Courts will enforce a strict timeline for these reports, often requiring a complete record of actions within 30 days. If the agent fails to comply, they may face legal consequences such as restitution or removal.
How To Protect Yourself (And Why You Should)
Keeping detailed records is one of the most effective ways to protect yourself as an agent under a POA. This includes documenting every transaction with the date, amount, purpose, and supporting evidence such as receipts, invoices, or bank statements. Even minor expenses must be accounted for because it provides complete transparency.
Understanding what you cannot do as an agent under a POD is equally important. You must comply if the POA document does not explicitly permit specific actions, such as making gifts or taking out loans. Courts have penalized people for doing something unauthorized. This includes instances where agents claimed reimbursement for personal expenses or misused the principal’s funds.
If disputes arise, agents must fully cooperate with requests for documentation. Refusing to provide records or ignoring requests can lead to court intervention. In such cases, a judge may appoint a professional guardian to take over the agent’s responsibilities. This process can be costly and may lead to outcomes that neither the agent nor the principal intended.
By maintaining meticulous records, adhering to the authority granted by the POA, and acting in the principal’s best interests, you can fulfill your responsibilities while protecting yourself from liability.
Learn More About Your Legal Obligations
Serving as an agent under a Power of Attorney requires diligence and responsibility. If you have questions about your role or how to handle disputes, we can help. Schedule a consultation with Norton Pelt to understand your responsibilities and protect your interests.
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