Powers of Attorney- Part 2

What a Power of Attorney is Not

Many individuals are uncomfortable with giving another person power of attorney for fear of abuse or mismanagement. However, an agent serving under a power of attorney is not granted free reign to control someone's assets as they see fit. An agent has a fiduciary duty to act in the grantor's best interest. In other words, an agent can only act for the benefit of the grantor and do those things that the grantor him or herself would do. If ever there is an allegation of wrongdoing against someone who has a fiduciary duty, that person is basically guilty until they prove themself innocent.

My wife and I had an opportunity to witness the "suspect" use of a power of attorney first hand. We were enjoying dinner out of town. The waiter was delivering the bill to the party at the next table, when one of the members of that party jumped up to grab the bill, shouting "I'll pay for this one, I got Daddy's power of attorney." Normally, as an estate planner, I would have immediately jumped up and questioned this exercise of her fiduciary duty. However, this particular dinner group was most scary and I am afraid it would not have ended well for me.

Even though your agent owes you a strict fiduciary duty in the administration of your power of attorney, you should still take care in who you select to serve in that role.