What Are Your Responsibilities as Power of Attorney
If a family member or friend asks you to serve as power of attorney it is only fair to know what responsibilities you might assume and what other alternatives might be available. In some cases the absence of a power of attorney can have serious consequences when there is a crisis. It is good to be prepared. Still the person assuming the responsibility needs to know what he/she can or cannot do and what power of attorney means. This is a brief run through of duties and benefits involved in serving as power of attorney – both for you and for your friend
or family member.
- There are different kinds of powers of attorney. In the past it was more common to combine health care powers and financial powers in one document. Today the tendency is to have two separate documents. The
person who serves as health care agent can be separate from the person assuming the financial role. This makes sense. The person who can be depended upon to make intelligent critical care decisions might not be the same person who can manage accounts when needed or pay bills. First you need to know what role you are being asked to play. - Powers of attorney do not replace the decision making ability of the person who appoints you. One way to think of a power of attorney is that it is a document that appoints you to be a partner with the person who gave it to you. It is usually there in reserve for a later date and typically it is called into play when that person is no longer able to act on his/her own but it does not replace the decision making ability of the person who gave it to you. Only guardianship would do that.
- A “durable” power of attorney simply means that it continues in effect after the person who gave it to you becomes incapacitated/unable to act. I have been asked many times by individuals whether the document being signed/executed is a “durable” power of attorney. In Pennsylvania a power of attorney is “durable” unless the document says it is not. However, we usually use the term “durable” in the document to clarify that the power that is given continues even when the person who gave it becomes
incapacitated. In most cases a power of attorney is sufficient to take needed actions and prevents the need for guardianship at a later date where the person who gave it to you has become incapacitated. - What does a person appointed power of attorney promise? The person appointed as power of attorney promises to act “in good faith” and “in accordance with” the “reasonable expectations” of the person who gave it to the extent known. The agent also agrees to “act only within the scope of authority granted.” The acknowledgement states that the agent will keep that person’s assets separate (unless he/she is a spouse or assets are already not kept separate), use “reasonable caution and prudence” and “keep a full and accurate record” of all transactions. Some financial power of attorney documents contain provision for reasonable payment for services. I would approve even if the agent decides against payment for her/himself. Occasionally duties can be more than expected.
- A power of attorney does not obligate you to pay from your own funds for the bills of the person who gave it to you. One factor that sometimes discourages friends or family from assuming the role of financial power of attorney is the notion that somehow it obligates the agent to pay the bills of the “principal” (the person who gave you the power) from your own funds. This is not the case. An agent under power of attorney is obligated to act responsibly with the funds of the principal but is not thereby pledging his/her own funds to pay that person’s bills. If there are any questions regarding responsibilities and you are an agent under power of attorney you should consult an attorney who can provide advice in specific instances including when obligations of the principal exceed assets and income.
- Powers of attorney can be critically important when there are no other reasonable means to resolve problems. You do your friend or family member a great kindness by responsibly serving as agent under power of attorney. It is helpful to remember this when serving.
About the Author Janet Colliton
Esquire, Colliton Law Associates, P.C. Janet Colliton has practiced law for over 38 years, 37 of them in Chester County, Pennsylvania, a suburb of Philadelphia. Her practice, Colliton Law Associates, PC, is limited to elder law, Medicaid, including advice, applications and appeals, and other benefits planning including Veterans benefits, life care and special needs planning, guardianships, retirement, and estate planning and administration.