Wednesday, August 22, 2012
I’m Power of Attorney for my Dad. What are my Duties?
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, and another one I will post in a few days, are 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.
Pennsylvania law requires that, unless the power of attorney document specifically varies these duties, you must:
(1) Exercise the powers for the benefit of the Principal;
(2) Keep the assets of the Principal separate from your own;
(3) Exercise reasonable caution and prudence;
(4) 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.
In Pennsylvania, if your power of attorney was signed after April 12, 2000, you must sign a form which acknowledges that you agree to follow the above 4 requirements. Unless your signed acknowledgment form is affixed to the power of attorney you do not have any authority to act. So don't forget to do this. [Note, this requirement applies only to powers of attorney for financial matters, and not to powers of attorney that are limited to health care decision making].
A reason that the law requires you to sign the acknowledgment form is to help ensure that you understand these responsibilities. Another reason is that your signature on the form makes it easier to sue you either civilly or even criminally if you fail to abide by these standards.
Being someone’s Agent is serious business. You need to understand this before you start.
In my next post, I will give you some additional guidance on how you can successfully go about meeting your responsibilities as your father’s agent.
Click here to read Part 2 of this article.