I'm Listed in a Power of Attorney—What Should I Do?
If you are named in someone's power of attorney, you are not obligated to take on this role--you can always decline to serve. If, however, you take action as the agent then you have effectively accepted the role as an agent. If you choose to take on the role of an agent, you need to understand the position that you have taken on because it has legal rights, duties, and risks.
First, it is helpful to understand what it means to be an agent under someone's power of attorney. As an agent, you have a fiduciary duty to handle the principal's property as a prudent person would do so in dealing with the property of another. If you have special skills or expertise (or simply hold yourself out as having special skills or expertise), you are held to a higher standard to the principal.
If you fail to meet this fiduciary duty, then you could be liable for causing (A) loss or depreciation of value in property, (B) profit made by your conduct, or (C) lost profits that the principal could have made.
The role of an agent is a risky position, but you can take steps to mitigate the risk of potential adverse claims being brought against you. Primarily, you should create a record-keeping system, maintain records of all incoming and outgoing transactions from any accounts that you have access to, maintain any records of purchases, sales, leases, or financing of property, and prepare periodic accountings of your actions. These records should be held for at least four years after the principal's death.
This is a lot, but as an agent, you are entitled to at least reasonable compensation, and you are entitled to reimbursement for reasonable expenses incurred as a result of acting as an agent.
If you do not take these steps, you could end up paying a fortune for an attorney to assist you if claims are made in the future. However, if you have the assistance and advice of an attorney on an ongoing basis, then you can respond to future inquiries appropriately and as necessary, and hopefully avoid the need for anyone initiating litigation.
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