What to Do When Named as an Agent in a POA
A Power of Attorney (POA) is an essential legal document for anyone, whether you’re a young adult heading off to college or a grandparent in your golden years. It grants someone the authority to make decisions on your behalf. With a POA, the agent you designate can manage financial decisions, access your bank account, loan money in your name, and more.
When you’re named as an agent in someone’s POA, you’re placed in a position of extreme trust. The principal (the person who created the POA) is placing their confidence in you to act in their best interests. This responsibility can be overwhelming. It gives you the authority to make significant decisions about important documents, finances, and other critical matters.
When the time comes to act as the agent, knowing where to start can help you feel more confident and secure in your role. Here are a few best practices to guide you:
1. Know When to Use the Power of Attorney
POAs are powerful legal tools and should be treated with caution. As an agent, it’s important to know when and how to use the authority granted to you. Generally, a POA becomes effective as soon as the principal signs it. However, this doesn’t mean you should act immediately.
A POA is meant to assist the principal when they are unable to make decisions themselves—whether due to illness, absence, or mental incapacity. If the principal is still able to make decisions on their own, you should refrain from using the POA.
It’s also important to clarify a common misconception. A POA cannot be used after someone’s death to avoid probate. A POA is only valid while the principal is alive. Using it after their death can lead to legal issues. If you’re uncertain about other estate planning tools, it’s a good idea to consult with an experienced estate planning attorney.
2. Keep Detailed Records
As you manage the principal’s affairs, it’s crucial to maintain thorough records of all actions you take. This includes moving money, signing checks, or making distributions. Keeping accurate notes of each transaction will help protect you from potential disputes later. It will also show that you acted in the principal’s best interests.
3. Understand What You Should and Shouldn’t Do – Even If You Can
As an agent, you have a fiduciary duty to act solely in the best interests of the principal, not for your personal benefit. It’s important to understand the limits of your authority. Just because you can do something doesn’t mean you should.
Certain actions can raise red flags or make it appear that you’re violating your fiduciary duty. For example, opening a joint account with the principal may seem like you’re transferring their assets to yourself. Even if your intentions are good, others—like courts—may not see it that way. You should also avoid giving gifts, transferring ownership of property (e.g., vehicles), or changing the principal’s estate plan unless explicitly instructed in writing. These actions could later be challenged, so it’s best to avoid them unless you have clear, documented instructions from the principal.
We Can Help
Being named as an agent in a POA is both an honor and a significant responsibility. Understanding how to properly execute this role can help ease any concerns. It ensures you’re acting in the best interest of your loved one.
If you’ve been named as an agent and need further guidance, contact us. We’re here to help you navigate this important responsibility with confidence.
Disclaimer: The information you obtain in this post is not, nor is intended to be, legal advice. This blog shares general best practices when navigating Virginia or West Virginia law, but you should consult an attorney for advice regarding your individual situation.