What Are the Duties of Power of Attorney?

By Larissa Bodniowycz, J.D.

What Are the Duties of Power of Attorney?

By Larissa Bodniowycz, J.D.

A power of attorney is a legally enforceable document that grants one person, the agent, the ability to act on behalf of another person, the principal, in specific matters ranging from health care to the management of personal property and finances. A principal generally uses this document to allow the agent to act when the principal cannot carry out their own affairs because of mental or physical incapacitation or unavailability.

Pen resting on document

Although the power of attorney is the name of the document, the term sometimes refers to the agent.

Powers of an Agent

With this authority, the agent steps into the shoes of the principal and makes important decisions for the principal. The exact scope of the agent's power depends on the type of power of attorney.

By default, this document grants the agent the broad power to act on behalf of the principal in all types of financial or property matters. A principal may execute a limited power of attorney for a specific purpose, such as for the purchase or sale of property or handling a certain bank account.

A principal can also grant an agent powers to make health care decisions on the principal's behalf. However, in most states, the principal must execute a separate document called a medical or health care power of attorney for this purpose.

Duties of an Agent

Through one or more powers of attorney, the principal can authorize an agent to manage numerous tasks, including entering into contracts, dealing with real and personal property, handling the principal's financial and tax affairs, and arranging for the principal's housing and health care.

The agent's primary duty is to abide by the terms of the relevant document. The agent may only act to the extent that the written agreement allows. If the principal gives the agent specific directions regarding the actions the agent should take, the agent must follow those directions. It is good practice for the principal to discuss and then confirm in writing any expectations they have for the agent. The agent must act in the principal's best interest, rather than in their own interest.

The agent also must avoid any conflicts of interest. The agent cannot commingle or combine their property with the principal's property, unless the principal and the agent jointly owned the property before drafting the power of attorney. For example, if the two are married, property the couple jointly owned would be permissible. The agent should also keep detailed records of all transactions the agent enters into on behalf of the principal.

End of an Agent's Duties

An agent's duties cease when the power of attorney ends or when the agent resigns. A power of attorney ends when the principal dies or revokes the document, or upon the completion of the transaction for which the principal created the document. An agent may resign from acting on behalf of the principal by following the specific terms laid out in the written agreement if the agreement specifies a method for the agent to resign.

A power of attorney is a useful life-planning tool. Choose the person you designate with these powers carefully, as they will have complete control over vital areas of your life should you be unable to make decisions yourself. If you anticipate only needing this assistance for a limited time, consider limiting the agent's term of service or giving them a means to resign.

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