A power of attorney (POA) authorizes an individual to take certain actions on behalf of someone else. POAs sometimes relate to healthcare choices, but they often address personal business dealings. The person granting the authorization is typically referred to as the principal. The individual acting on the principal's behalf may be called either an agent or an attorney-in-fact.
Agents Are Fiduciaries
An agent has a fiduciary responsibility to the principal. This means that if you agree to act as someone's agent, you must always put the best interests of that person first. You have a legal responsibility to act with "due care" and not to do any harm. You must handle the principal's personal business matters conservatively, not necessarily as you would handle your own.
Rights Depend on the POA
Typically, a POA states exactly what you have the right to do as agent. If the POA doesn't mention a specific action that you feel you must take, check with an attorney. If the POA is silent and doesn't list something you think you should be able to do, it often means that you don't have the right to do it. A POA can specifically give an agent the right to make real estate transactions, take on necessary debts, handle the principal's banking needs, or buy and sell personal property.
Decision-Making Depends on the Principal
Some POAs go into effect immediately, as soon as the principal signs them. You are responsible for honoring the principal's wishes and directions. You can't make decisions on your own if they conflict with the wishes and directions of the principal. Other POAs are "springing," meaning that they don't authorize the agent to do anything unless and until the principal becomes incapacitated. A court must usually decide when the principal is incapacitated. As an agent, you can't decide on your own that the principal can no longer handle his or her own affairs. If you are the agent of a springing POA, you must use due care in making decisions.
Keep Careful Records
As an agent, you're also responsible for keeping the principal's finances separate from your own, and for maintaining a written record of everything you do on the principal's behalf. The laws in most states require you to be able to produce your records for the principal or the court whenever you're asked.
An Estate Lawyer Can Help
The law surrounding the role of a POA agent is complicated. Plus, the facts of each case are unique. This article provides a brief, general introduction to the topic. For more detailed, specific information, please contact an estate lawyer.