This means that when you are serving as someone's agent under a power of attorney, you must always act in their best interest. You must act prudently and reasonably when carrying out your duties under the power of attorney.
Read the document
Not all powers of attorney are the same. Always read the document before acting to make sure you understand what your responsibilities are. Do you have the duty to account to the person who gave you the power (the principal)? Do you have a duty to account to anyone else? Do you have the right to deal with real estate? Bank accounts? Can you make gifts? Can you use a photocopy of the original or do you need the original?
If there are things you don't understand, make a note of them and seek advice.
Keep property separate
Do not transfer all of the person's property into your name, or into joint accounts. This is known as "co-mingling" and can cause problems down the road. Your authority to handle the property comes from the durable power of attorney document, not from having your name on the accounts.
Keep good records
As noted above, you may have a duty to report to the principal or to others, so always keep good records about how you are managing the principal's property. Online checkbook registers can provide an easy way to keep track of finance, and allow for running reports.
Avoid personal liability
When you are acting as someone's agent, always make that clear when you are signing anything in that role. This helps you avoid personal liability for the transaction. For instance, if a nursing home asks you to sign an admission agreement, sign it as "[Your name] as Attorney-in-Fact for [principal's name]" or "[Principal's name], by her Attorney-in-Fact, [your name.]" This makes it clear to the third party that you are acting on behalf of someone else, not in your individual capacity.
Communicate with the Principal
Even if the principal (the person who signed the power of attorney) is incapacitated, you should always make your best efforts to communicate with them and let them know what's going on.
Do not hesitate to seek assistance with your duties. Hiring a financial advisor, bookkeeper, attorney or other professional to assist you is a good practice for someone acting as agent under a power of attorney. This is especially helpful if you were not involved in the principal's finances before and the records you are coming across are hard to understand or in disarray. If the principal has an existing team of advisors, start there. You may also wish to seek legal advice to help make sure you are fulfilling the terms of the document.
You've been giving a lot of responsibility and do not have to take it on alone.
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