Dear Attorney Tully:
My parents just notified me that they have given me Power of Attorney. What are my responsibilities? What does it mean that I have a fiduciary responsibility to my parents? Can I be liable for my actions as power of attorney?
ANSWER: Often, the attorney meets with his client but not with the attorney-in-fact (person appointed under the power of attorney) and thus, is unable to guide the attorney-in-fact (often the adult child) in the use of the power of attorney.
When you have just been appointed as an agent, or “attorney-in-fact,” under a durable power of attorney, you have certain responsibilities and powers under that document.
What are your duties as attorney-in-fact?
You have been appointed to represent the “principal” with respect to his or her financial affairs. In effect, you can step into his or her shoes and take whatever investment and spending measures the principal would take himself or herself. Unless limitations have been placed in the power of attorney itself, you can open bank accounts, withdraw funds from bank accounts, trade stock, pay bills, cash checks. All steps you take must be consistent with your role as a “fiduciary.”
What does it mean to be a “fiduciary”?
This means that you will be held to the highest standards of good faith, fair dealing, and undivided loyalty with respect to the principal. You must always act in his or her best interest and keep his or her goals and wishes in mind in making any discretionary decision. However, you do not have the same responsibility as a trustee or executor, who has total control over the estate or trust assets since you share control with the principal himself or herself. Your duty only covers the level of care you take in your own actions as attorney-in-fact.
Can I be held liable for my actions as attorney-in-fact?
Yes, but only if you act with willful misconduct or gross negligence. If you do your best and keep the principal’s interests in mind as the basis of your actions, you will not incur any liability.
When does the power of
attorney take effect?
Unless the power of attorney is “springing,” it takes effect as soon as it is signed by the principal. A “springing” power of attorney takes effect only when the event described in the instrument itself takes place. Typically, this is the incapacity of the principal as certified by one or more physicians. Your power of attorney indicates whether it is effective immediately or is springing. In most cases, even when the power of attorney is immediately effective, the principal does not intend for it to be used until he or she becomes incapacitated.
Attorney Daniel O. Tully is a partner in the law firm of Kilbourne & Tully, P.C., members of the National Academy of Elder Law Attorneys Inc., with offices at 120 Laurel St., Bristol. 860-583-1341.