A Durable Power of Attorney is a written document in which a person (the principal) states that they are giving someone else (the agent) the authority to make certain decisions and to act on their behalf. In short, it is someone you choose to make decisions and take action in your place. The execution of a Power of Attorney does not mean the principal is not longer able to make decisions; it simply means that the agent is sharing the decision-making power with the principal.
The word "durable" means that the agent can continue to make decisions if and when the principal becomes incapacitated. Thus, if the time comes due to aging, illness, or an accident that you are unable to tell the doctors what kind of treatment you want, or how to handle your finances, the durable power of attorney is able to easily take care of these matters for you. The durable power of attorney works because the agent is obligated to act in the best interest of the principal; making decisions and using the principal’s money and property solely for the benefit of the principal.
An Agent's Duties
The Court will place a limitation upon the agent if the agent’s duties are not specifically stated within the Power of Attorney. An agent must keep the principal’s money separate from his or her own money. He or she must not be personally involved in or stand to profit by any transaction where he or she represents the interests of the principal. The agent is also required to keep separate and accurate records regarding all transactions that he or she engages in on behalf of the principal.
Recent legislative changes dramatically increase the exposure of a fiduciary agent to financial liability for mismanagement of assets. This is a measure of protection for the principal due to a rise in the abuse of power agents were seen exercising over principals. The agent and the principal should know the consequences of the benefit rule and Arizona statutes dealing with financial exploitation of vulnerable adults. When accepting an appointment as an agent under a Power Of Attorney, you should proceed with caution understanding all of the duties and liabilities in order to avoid possible prosecution.
The law specifies that an agent is not permitted to gift or transfer any of the principal’s money, personal property, or real property to themselves, unless the Power of Attorney contains specific authority to do so. The law also states that a person who is in a position of trust with an incapacitated adult, who knowingly takes control of that adult’s assets with the intent to permanently deprive that person of their assets is guilty of theft and is subject to damages in a civil suit brought by or on behalf of the incapacitated person that equal up to three (3) times the amount of the monetary damages.
Speak With An Experienced Estate Planning Attorney
If you are an agent under a Power of Attorney, and are unsure about taking an action, or if you are a principal and have questions regarding particular actions taken by your fiduciary agent, contact our guardianship attorneys at Platt & Westby, P.C., or call 602-277-4441 for a free consultation.