Illness, injury, or age can often render a person unable to take proper care of their finances and their property. As a solution to this issue, state law allows people to set up a power of attorney for property. This is a legal document that lets a person, referred to as the principal, designate a trusted agent to handle their property with the principal’s best interests in mind. This document gives the agent a variety of legal powers over the principal’s money and property, but it also comes with legal duties that the principal must fulfill. Agents need to be aware of both of these things to properly complete their jobs without bringing liability onto themselves. It is important to work with an estate lawyer to ensure no legal issues arise from this process.
The Powers Granted
The powers granted to an agent under a power of attorney vary depending on the principal’s wishes, but generally, these powers include:
- The authority to buy or sell real estate on behalf of the principal
- The authority to deal with banks and safe deposit boxes for the principal
- The authority to represent the principal in insurance transactions
- The authority to buy and sell stocks and bonds for the principal
An estate lawyer can also create limitations on power or add extra ones. For example, the principal can allow the agent to buy and sell stocks and bonds, but also forbid them from selling a particular stock. They could also give the agent the power to give gifts on the principal’s behalf.
The Duties of the Agent
Importantly, by taking on these powers, the agent enters into a “fiduciary” relationship with the principal, meaning that they have a duty to act in the principal’s best interests. In addition to that general duty, the law also imposes other, more specific duties on the agent. For instance, the agent is required to act in accordance with any estate plans that the principal has put in place to the extent possible. Agents also have a duty to keep good financial records of any “receipts, disbursements, and significant actions conducted for the principal.” The law also forbids agents from taking certain actions. These forbidden actions include commingling the principal’s funds with their own, taking loans from the principal, and exceeding the authority granted by the power of attorney.
Contact an Estate Planning Law Firm Today
Powers of attorney are complex legal documents and managing them incorrectly can open the agent up to legal liability. If you are considering a power of attorney, make sure you speak with a lawyer who is skilled and knowledgeable in estate law. Call an experienced attorney, like an estate lawyer from a law firm like W. B. Moore Law LLC.