It is a big responsibility to be appointed as someone’s agent under a durable power of attorney (“POA”). As a fiduciary for the principal, the agent has numerous statutory responsibilities and can be financially responsible for any breaches of these duties. An agent is responsible to act in good faith in accordance with the principal’s reasonable expectations and within the scope of the authority granted under the POA. The agent must also attempt to preserve the principal’s estate plan to the extent that the agent has knowledge of it. The agent must also (1) act loyally for the principal’s benefit; (2) act so as not to create a conflict of interest that impairs the agent’s ability to act impartially; (3) act with the care, competence, and diligence ordinarily exercised by agents in similar circumstances; (4) keep a record of all receipts, disbursements and transactions made on behalf of the principal; and (5) cooperate with the person with authority to make health care decisions for the principal.
An agent may be personally liable if the value of the principal’s property declines as a result of an agent’s breach of the above duties. An agent may also be liable if they failed to act with care, competence, and diligence for the best interest of the principal in a transaction in which the agent personally benefited or had a conflicting interest in relation to the principal’s property or affairs. An agent may also be liable to the principal’s estate or the beneficiaries of the estate if they knew of the principal’s estate plan but failed to act in good faith to preserve it. The principal, their guardian, or other fiduciary acting on behalf of the principal may request an accounting from the agent as to the actions taken while acting as the principal’s agent under the POA. If the principal is deceased, the personal representative of the principal’s estate or successor in interest of the principal’s estate may request accounting from the agent as to the actions taken while acting as the agent for the principal under the POA. If such an accounting is requested, the agent must provide an accounting of the receipts, disbursements, and transactions within 30 days of the request. In addition, any of the following individuals may petition a court to construe the POA or review the agent’s conduct and grant appropriate relief: (1) the principal; (2) any fiduciary acting on behalf of the principal or the principal’s estate; (3) the agent named on the principal’s Health Care Power of Attorney; (4) the principal’s spouse, parent, or descendant; (5) the presumptive heir of the principal; (6) a beneficiary of a trust of the principal with a financial interest in the principal’s estate; (7) the principal’s caregiver or other person demonstrating sufficient interest in the principal’s welfare; (8) a person asked to be the principal’s agent under a new POA. If the agent breached his duties to the principal, the agent will be liable to the principal or the principal’s successors in interest for the amount required to restore the value of the principal’s property to what it would have been had the violation not occurred and the amount required to reimburse the principal or the princ
ipal’s successors in interest for their attorney’s fees and costs paid in pursuing the action against the agent’s.
FOR INFORMATION: To schedule an appointment regarding a possible breach of fiduciary duty, contact Phillip J. Henry, Esq. 440-243-2800. There are no legal fees for discussing a matter until the scope of the needed legal services has been discussed and established.