So you have been nominated to serve as an Attorney in Fact under a Durable Power of Attorney. What does that mean? An attorney in fact is a special type of agent. An Agent is someone authorized to act on another person’s behalf. As an attorney in fact under a Durable Power of Attorney you are authorized to act on the Principal’s behalf in certain financial and related matters. If you have been nominated as an Alternate attorney in fact, this means that you are asked to serve if the primary nominee is unable or unwilling to serve. Below are some frequently asked questions concerning your duties and obligations as an Attorney in Fact.
1. Do I have to agree to accept the appointment?
No, you do not. If you do not agree to serve, you should let the Principal know as soon as possible so other arrangements can be made.
2. Can I quit at any time?
You can generally quit. You should always notify the Principal as soon as possible of your intentions. There might be situations in which you would be held responsible if you abandoned your Principal in the middle of some activity.
3. Can the Principal remove me?
Yes. The Principal can remove you at any time. Once you have been informed in any manner that you are no longer to serve, your authority stops.
4. What can I do as an Attorney in Fact?
You need to read the language of the Durable Power of Attorney. Sometimes Attorneys in Fact are given very broad powers and other times they are given very limited powers. You have no powers beyond those described in the document. If you are unsure whether or not you are authorized to do a particular act, you should consult the attorney who prepared the document.
5. What can’t I do as an Attorney in Fact?
There are a few things that an Attorney in Fact cannot do even if the Durable Power of Attorney says otherwise. You may not sign a document stating that the Principal has knowledge of certain facts. For example, if the Principal was a witness to a car accident, you cannot give a statement for the Principal stating that the light was green. You may not vote in a public election for the Principal, or create or revoke a will or codicil to a will. Nor may you perform personal services for the Principal under a contract (such as writing a book). Likewise, if the Principal is a guardian or conservator for someone else, you cannot take over those responsibilities under the authority of the General Durable Power of Attorney.
6. When can I act?
Your authority to act depends both on the actual language of the Durable Power of Attorney and on the Principal’s capacity to manage his or her affairs. Some documents authorize you to act immediately upon direction of the Principal. Others allow you to act only after some event has happened, such as the Principal becoming incapacitated of making informed decisions. You need to read the document carefully.
7. When can I make decisions on my own for the Principal?
Normally, the Principal makes decisions and you, as an agent, are authorized to act to carry them out. Only when the Principal is so mentally incapacitated that he or she is unable to make informed decisions should you make decisions on your own for the Principal. Even then you have a duty to make them in the best interests of the Principal.
8. Would there be any consequences if I make decisions just because I think it is a good idea?
There could be. If the Principal is not mentally incapacitated and refuses to agree with some decision you made, you could be personally responsible for any costs required to reverse your decision.
9. Can I do anything I wish with the Principal’s property?
No. You are required to make all decisions and perform all actions for the benefit of the Principal and not yourself. An Attorney in Fact is looked upon as a “fiduciary” under the law. A fiduciary relationship is one of trust. If you violate this trust, you could face civil and criminal proceedings. The Principal remains the owner of all of his or her property. Taking anything for yourself, without the clear consent of the Principal, may be a crime.
10. If I agree to serve, am I responsible for the Principal’s debts?
No. Acting as an Attorney in Fact does not make you responsible for any of the Principal’s debts. The only way you become responsible is if you agree to co-sign some obligation.
11. What responsibilities and liabilities do I have as an Attorney in Fact?
You have a responsibility to deal fairly with the Principal and to be prudent in managing the Principal’s affairs. You, as Attorney in Fact, are liable to third parties only if you act imprudently or do not use reasonable care in performing your duties. If ever you are acting as an Attorney in Fact and are unsure as to whether you are doing the right thing, you should seek out professional advice not only to protect yourself but to protect the Principal.
12. I’m ready to do something as an Attorney in Fact. What do I do?
After being certain that the Durable Power of Attorney gives you the authority to do what you want to do, take the Durable Power of Attorney (or a copy) to the third party. Explain to the third party that you are acting under the authority of the Durable Power and are authorized to do this particular act. Some third parties may ask you to sign a document stating that you are acting properly. You may wish to consult your attorney before signing it. When acting as an Attorney in Fact, always make that clear when signing any document.
13. How should I sign when acting as an Attorney in Fact?
You always want it to be clear from your signature that you are not signing for yourself but are, instead, signing for the Principal. If you just sign your own name, you may be held personally accountable for anything you sign. As long as your signature clearly conveys that you are signing in a representative capacity and are not signing personally, you cannot be held accountable. It is best to sign as follows:
Jane Doe, by John Doe as her Attorney in Fact or
Jane Doe, by John Doe as her POA.
In both examples, John Doe is the Attorney in Fact and Jane Doe is the Principal. The exact wording is not important. Just make sure you indicate that you are signing for your principal, not yourself.
14. The third party will not accept the Durable Power of Attorney. What now?
For a number of reasons third parties are sometimes hesitant to honor Durable Powers of Attorney. Still, so long as the Durable Power of Attorney was lawfully executed and it has not been terminated, third parties may be required to honor the document. You should contact your attorney if a third party refuses to honor the document. Under some circumstances, if the third party’s refusal to honor the Durable Power of Attorney causes damage the third party may be liable for those damages.
15. Do I have to report my activities to anyone?
You always have a duty to report to the Principal. Whether you have more specific reporting duties depends on the language of the Durable Power of Attorney. You need to read it carefully to see if you are supposed to give regular written reports to someone else. Even if you are not required to report, it makes good sense to give regular reports to at least some of the Principal’s heirs and beneficiaries. This should protect you if someone later makes a false claim that you took financial advantage of the Principal.
16. Should I keep careful records?
Absolutely. There is increased awareness of the problem of financial exploitation of the elderly. There are new laws that make it easier to prosecute these crimes. You do not want to have to defend yourself against baseless charges. Careful records are your best proof of innocence.
17. Can I ever be forced to explain what I have done to a court?
Normally, you do not have to report to a court. However, if someone complains to a civil court or a criminal court that you have abused your powers, you may be forced to explain what you have and have not done.
18. When does my authority end?
Your authority stops if you quit or if the principal removes you. There are other events that can end your authority also. Your powers as an Attorney in Fact end upon the Principal’s death. At that time, the Personal Representative appointed by the Probate Court takes over. Also, if a court decides that you have not done your job well enough and/or that the Principal needs someone else to manage his or her affairs, the court may appoint a conservator or guardian to take over management duties. The conservator or guardian then steps into the shoes of the Principal and may remove you or may ask you to report to him or her.