At sometime during your life you may be appointed as an “Agent” under a Power of Attorney. A power of attorney is a written document in which a person (the “principal”) grants authority to another person (an “agent”) to act on their behalf. The principal can grant very wide powers or very narrow powers. If you are appointed as Agent under a Pennsylvania Power of Attorney, you should be aware of a couple of things.
Under Pennsylvania statue you must sign the acknowledgement accepting the appointment in order to act as agent under the Power of Attorney. Without this acknowledgement signed and attached to the power of attorney you do not have authority to act. The acknowledgment outlines the fiduciary relationship, and includes the following duties:
- Exercise the power for the benefit of the principal
- Keep separate the assets of the principal from those of an agent;
- Exercise reasonable caution and prudence
- Keep a full and accurate record of all actions, receipts and disbursement on behalf of the Principal
If you are an Agent but have not signed the Durable Power of Attorney, don’t sweat it. The Principal may not need you to act at this time. And that is ok. Nor does a Power of Attorney impose on you a “duty to act.” For example, if you are an Agent and you have signed the Acknowledgement, you do not have to pay the bills, file income tax returns, or make financial decisions on behalf of the Principal. Its only when you do start to act that the fiduciary duties listed above kick in. Remember the fiduciary duty is arising from the trust and confidence placed in you by those on whose behalf and benefit you act. So what are these fiduciary duties?
Exercise the power for the benefit of the Principal. Hmm… what does this mean? Under common law doctrine, an agent has a duty to act solely for the benefit of his or her principal, and not in the interest of the agent of a third party. This is commonly known as the duty of loyalty. When you are acting as an Agent under Power of Attorney you must exercise the power for the benefit of the principal. Moreover, any information or knowledge obtained in the course of the agency is confidential. So in other words as an Agent you cannot take actions that would benefit you. You must act for the benefit of the Principal
Keep separate the assets of the principal from those of an agent. This seems self-explanatory, however, for those of you that don’t get it… let me break it down for you DO NOT MIX THE PRINCIPALS ASSETS WITH YOUR ASSETS. Do not transfer real estate or close out a bank account, checking account, sell stock and then deposit those proceeds into your own personal account. Why?? Its Criminal…. Shall I count the ways? Theft by Unlawful Taking or Disposition, Theft by Disposition, Receiving Stolen Property, Theft by Failure to Make Required Disposition of Funds Received, Misapplication of entrusted property and property of Government or financial institutions.
Exercise reasonable caution and prudence. If you decide to act under the Power of Attorney then you must act with reasonable caution and prudence. In other words, exercise the care that a reasonable prudent person would exercise in a like circumstance.
Keep a full and accurate record of all actions, receipts and disbursement on behalf of the Principal. Unless otherwise agreed, an Agent has the duty to keep and make available to the Principal an account of all property and money received and paid out on the Principal’s behalf, including gifts to third parties. Pennsylvania statute does not provide that you must provide records to anyone else unless a 3rd party has filed a Petition with the Pennsylvania Orphans’ Court demanding an accounting.
If the Principal or 3rd party has filed a Petition with an Orphans’ Court demanding an accounting, get an attorney.