Congratulations on agreeing to serve as an Agent under a financial power of attorney!
Let’s go over some of the ground rules. Pay attention now: the penalty for messing up is a civil lawsuit and maybe a little jail time. Or maybe a lot of jail time.
You need to understand the terminology. The person who signed the Power of Attorney is the principal. You are the Agent.
You should read the document. It spells out what you are authorized to do. You don’t have any authority other than what is specified in the document. Period.
The Power of Attorney gives you powers. It does not take powers away from the principal. Just because you are the designated agent, you don’t suddenly get to decide where the principal lives or who the principal sees or what the principal buys. A Power of Attorney is not the same thing as a guardianship.
More specifically, a Power of Attorney does not authorize you to take an action against the principal’s wishes. For example, you can’t use it to sign the principal into a long-term care facility if the principal doesn’t want to stay there. The principal can revoke the Power of Attorney at any time.
A Power of Attorney does not give you free rein to steal the principal’s money, even if you call it a gift or a loan. It’s not your money. You can’t steal business opportunities from the principal. You can’t self-deal.
You are a fiduciary. That means you owe the principal the highest duty of loyalty and honesty. You should keep records of all of the transactions you handle under the Power of Attorney. You should not engage in a transaction that you cannot defend. The principal has the right to request an accounting from you.
You will run into third parties who refuse to accept your Power of Attorney. Texas law doesn’t require that they accept it. That can be unfortunate.
You may be catching the drift – you have affirmative duties, you have limited powers that can be denied or revoked at any time, and you have unlimited liability.
Once again, congratulations on your appointment!
Hammerle Finley Law Firm. Give us a call. We can help.