Power of AttorneyIf someone has named you as an agent under a durable power of attorney, you will be allowed to handle that person’s finances. (The person who signs the power of attorney is known as the “principal”; you’ll be known as the agent or “attorney-in-fact.”) Here are answers to some questions you might have:

What are my duties?
You are responsible for handling the principal’s financial affairs. Generally, you can step into his or her shoes and take whatever investment and spending measures the principal would ordinarily take. This may include opening bank accounts, withdrawing funds, trading stocks, paying bills, and cashing checks. Read the power of attorney document carefully; it might give you other powers (such as making gifts), or place certain limits on your powers. Note that any financial steps you take must be consistent with your role as a “fiduciary.”

What does it mean to be a fiduciary?
It means you must always act in the principal’s best interest (not in your own best interest), and always keep his or her goals and wishes in mind when making any decisions.

When does the power of attorney take effect?
Some powers of attorney take effect as soon as they are signed by the principal. Others, called “springing” powers, take effect only if the principal becomes incapacitated (and some require that the person’s incapacity be certified by one or more doctors). But you should note that, even if a power of attorney is immediately effective, the principal often does not intend for it to be used unless he or she actually becomes incapacitated. You should discuss this with the principal so that you understand his or her wishes.

What if there is more than one agent?
Some powers of attorney require all agents to agree on any action, and some say that each agent can act independently. But even if you can act independently, it is important to communicate with any other agent, to make certain your actions are consistent.

Can I be held legally liable for my actions as an agent?
Yes, but generally only if you act with willful misconduct or gross negligence. If you do your best and keep the principal’s interests in mind as the basis of your actions, you should be fine.

Can I be fired?
Yes. A principal may revoke a power of attorney at any time, usually just by sending you a letter to this effect. If a guardian is appointed for the principal, this does not automatically revoke a power of attorney. However, the guardian can revoke the power of attorney.

What records should I keep?
It is very important to keep good records of your actions, so as to be able to answer any questions anyone might raise. The most important rule is not to commingle the funds you are managing with your own money. Keep everything in separate accounts. Often, the easiest way to keep records is to run all funds through a separate checking account; the checks will act as receipts and the checkbook register can serve as a running account.

Can I be paid for acting as an agent?
Yes, if the principal agrees to pay you. In most cases, the agent is a family member and does not expect to be paid. If you would like to be paid, you should discuss this with the principal, agree on a rate of payment, and put that agreement in writing so as to avoid misunderstandings. Any payments for services should be reasonable; a payment that is too large might suggest that you are not truly acting as a fiduciary.