What are the duties of the person who is acting as “Power of Attorney” for another?
A Power of Attorney for Property document is a very helpful and very effective estate planning tool. In a Power of Attorney for Property document, you are able to name a person who can act for you in business and financial affairs. The person who creates the power of attorney document is called the “principal.” The person who is appointed to act on behalf of the principal is called the “agent.” This article will focus on the duties and responsibilities of the agent.
The Power of Attorney for Property document can be effective immediately after you sign it. For example, immediately after the Power of Attorney for Property is signed, your agent can begin acting on your behalf with financial institutions and creditors. On the other hand, you may wish that your agent only act on your behalf after you are unable to manage your own financial and business affairs. In either instance, your agent will owe you a fiduciary duty once they undertake the responsibilities set forth in the Power of Attorney for Property documents.
A fiduciary relationship is a relationship in which one individual must act in the best interests of another. The agent has a legal and ethical obligation to act in the principal’s best interests. In Illinois, agents are required to do the following:
- Do what the principal reasonably expects to be done with the principal’s financial affairs;
- Act in good faith for the best interest of the principal;
- Keep a complete and detailed record of all receipts, disbursements, and significant actions conducted for the principal;
- Try to preserve the principal’s estate plan, if preserving the estate plan is consistent with the principal’s best interest; and
- Cooperate with the person who has authority to make health care decisions for the principal.
You may review this list of responsibilities in the Illinois state statutes.
An agent must NOT perform any of the following acts:
- Create a conflict of interest between the principal and the agent;
- Do anything that is beyond the authority granted by the power of attorney;
- Commingle the principal’s funds with the agent’s funds;
- Borrow funds or other property from the principal; OR
- Continue acting on behalf of the principal after a major life event such as the death of the principal, a legal separation from the principal, or the dissolution of marriage to the principal.
If you are acting as an agent under a power of attorney document, please contact Hays Firm, LLC when the need for legal advice arises. You may also contact us if you are concerned about whether a loved one’s finances are being properly managed by the person acting as agent.