A power of attorney is a very common estate planning tool used to convey to one person the power or authority to act on behalf of another person. The most common purposes for creating a power of attorney are to handle legal, financial or medical needs. For example, a power of attorney is used to allow someone else to pay your bills, manage your bank accounts or manage other areas of your finances for you. It can also be used to allow someone else to make health care decisions for you, if you are no longer able to do so.
What is an agent?
The agent is the person you designate to actually manage your affairs. Once an agent accepts the authority provided under the power of attorney, a relationship is created between the agent and the principal. With that authority comes certain legal obligations that must be fulfilled. Although the role of an agent is voluntary, once it is undertaken, the agent is bound by the obligations and responsibilities that come with the role.
An agent’s responsibilities to the principal
Being an agent under a power of attorney is an important role and should not be taken lightly. An agent is required to act in good faith and with proficiency, carefulness and consideration. An agent is expected to avoid conflicts that might prevent him or her from acting in the best interests of the principal. An agent’s actions are governed solely by the authority established in the power of attorney document itself. An agent must never supersede the desires and preferences of the principal in favor of his or her own.
Also, the assets of the agent must always be kept separate from those of the principal. When an agent conducts financial transactions on behalf of the principal, the agent can only use the principal’s funds for the principal’s benefit. The agent is also required to keep complete and accurate records of all transactions made on the principal’s behalf. In fact, the agent should always be able to provide an accounting to the principal.
The general and limited powers of an agent
Depending on the type of power of attorney you created, your agent’s powers can be spelled out in general terms, or be very limited and specific. For instance, an agent may be given the general authority to handle all financial or health care decisions, in the event the principal becomes incapacitated.
On the other hand, a limited power of attorney will provide specific instructions for the agent, or contain limitations on the scope of the agent’s authority. Once those specific duties have been performed, the power will automatically be revoked.
Can an agent ever resign?
An agent may resign by simply giving notice to the principal or a co-agent or successor agent. If the principal is incapacitated, the agent must give notice to the guardian or conservator, if one has been appointed.
If you have questions regarding a power of attorney, or any other estate planning needs, please contact Sexton, Bailey Attorneys, PA online, or by calling us at (479) 443-0062.