Unsure about the role of a power of attorney? Agents who breach or neglect their duties could face legal consequences.
It is essential for power of attorney agents to understand their obligations to protect the principal’s interests and avoid personal liability for failing to properly carry them out. Fiduciary duties require that any action an agent takes under a POA aligns with the principal’s best interests, while daily responsibilities involve routine tasks and decisions the agent may need to make on the principal’s behalf.
Breaching fiduciary duties can be intentional or negligent. For instance, using a POA to transfer money to yourself without authority is generally considered willful misconduct, whereas missing a bill payment may be seen as unintentional negligence. Both can harm the principal financially, but fiduciary breaches carry harsher legal consequences.
Powers of attorney, unlike conservatorships, are not court-supervised. In other words, no one automatically monitors an agent’s actions. For this reason, it’s vital for the principal and their loved ones to stay vigilant and act promptly if the agent fails to uphold their duties. Courts generally only intervene if a petition is filed.
If questions arise about power of attorney responsibilities or liabilities, an experienced probate lawyer can provide the guidance needed to navigate the situation effectively — whether you are the agent, the principal or a concerned party.
Section 1
Section 2
Section 3
Section 4
Section 5
Section 6
Section 7
What Does a Power of Attorney Do?
A power of attorney can “do” many things, but most people create POAs for incapacity planning. In other words, they establish a POA to ensure a trusted individual has the authority to act on their behalf if they lose the mental capacity to manage their own affairs.
For example, consider an elderly individual at high risk of stroke. What happens if they suddenly cannot communicate or consent to medical treatment? Or if a health insurance bill goes unpaid, creating a gap in their coverage?
A POA addresses these situations. A health care agent can consent to medical procedures on the principal’s behalf, while a financial agent can manage bills and other financial and legal matters during incapacity. In this way, a POA helps safeguard both the principal’s health and their financial wellbeing.
Does a Power of Attorney Have a Fiduciary Duty?
An agent under a power of attorney is a fiduciary, meaning they are subject to fiduciary duties owed to the principal. Fiduciary duties are designed to ensure that the agent acts with the highest degree of loyalty, honesty, and diligence because the principal may be entirely reliant on the agent’s judgment and actions.
Fiduciary duties are not just protective — they are proactive. Agents are expected not only to avoid harm but also to take deliberate steps to enhance the principal’s interests whenever possible.
For example:
- A financial POA agent must preserve the principal’s assets and protect them from unnecessary risk, but they are also generally expected to grow those assets prudently, such as by investing in low-risk stocks or bonds.
- A health care POA agent does more than consent to medical treatment in emergencies — they may coordinate care across providers, manage medications and take other steps to ensure the principal’s overall wellbeing.
What Are the Key Fiduciary Duties of a Power of Attorney?
The key fiduciary duties of an agent under a power of attorney include a strict set of legal obligations that define the standard of conduct an agent must maintain when acting on the principal’s behalf. Some of these duties are outlined below.
Key Power of Attorney Fiduciary Duties | ||
Fiduciary Duty | What It Means | Example |
Duty of Loyalty | The agent must act only in the principal’s best interests. | An agent cannot use the principal’s funds to provide a loan to themselves or others — even if they intend to repay it in full — unless the power of attorney expressly authorizes it. |
Duty of Care | The agent must act reasonably and prudently when making decisions for the principal. | An agent should not invest the principal’s money in speculative or high-risk investments. |
Duty to Follow POA Terms | The agent must abide by the terms outlined in the POA, adhering to the principal’s known wishes and avoiding exceeding the authority granted. | An agent cannot sell the principal’s real estate unless the POA expressly grants them authority to do so. |
Duty to Keep Records | An agent must maintain thorough records of all transactions and decisions made on the principal’s behalf, including financial statements, receipts, transaction logs, and other relevant documentation. They may be required to provide a full accounting upon request. | A health care agent must maintain thorough medical records for the principal, as these records may be necessary for providers to evaluate treatment options and assess potential medication risks. |
Duty to Avoid Conflicts of Interest | An agent must avoid situations where their personal interests conflict with the principal’s best interests. If a conflict does arise, the agent must fully disclose it. | An agent with outside business interests should avoid investing the principal’s assets in those ventures, as doing so may create a conflict of interest and disproportionately benefit the agent. |
What Are the Real-World Responsibilities of Power of Attorney Agents?
The scope of an agent’s responsibilities generally varies depending on the type of power of attorney and its specific terms.
Under a financial POA, duties are typically financial or legal in nature, while a health care POA involves care-related responsibilities and medical decision-making.
Regardless of these differences, an agent’s core fiduciary obligations remain consistent.
Financial Power of Attorney Responsibilities
A financial power of attorney (also called a general POA) grants an agent broad authority to handle financial and legal matters on the principal’s behalf. While standard POA forms typically outline common agent duties, the principal can expand, limit or withhold authority based on their preferences.
Common financial POA responsibilities include:
- Paying bills (e.g., utilities, rent/mortgage, credit cards)
- Collecting income or other payments
- Managing financial accounts
- Handling investments and financial planning
- Paying medical expenses
- Filing and paying taxes
- Managing insurance policies
- Avoiding penalties, late fees and financial losses
The financial POA must explicitly authorize the following actions:
- Self-dealing or gifting from the principal’s assets
- Changing beneficiary designations (e.g., on bank accounts, insurance policies or other assets)
- Making changes to a trust
Financial POAs generally prohibit the following actions:
- Using the POA after the principal’s death
- Changing the principal’s will
- Delegating authority to another individual
Health Care Power of Attorney Responsibilities
A health care power of attorney (also called a medical POA) grants an agent authority to make medical decisions and manage care on behalf of the principal in the event of incapacity.
The principal can grant or limit authority based on anticipated needs, personal values, or end-of-life preferences. Decisions made by a health care agent must always reflect the principal’s known wishes and any existing health directives — not the agent’s personal views.
Unlike financial POAs, medical POAs can sometimes grant limited authority after the principal’s death if the document explicitly allows it. When such authority is granted, the agent may have priority to make these decisions over a surviving spouse or other family members.
Common medical POA responsibilities include:
- Consenting to or refusing treatment
- Coordinating care among medical providers and facilities
- Making end-of-life care decisions
- Accessing medical records
The medical POA must explicitly authorize the following actions:
- Donating organs, tissues or other body parts after death
- Authorizing an autopsy after death
- Directing the disposition of remains
Medical POAs generally prohibit the following actions:
- Placing the principal in a mental health treatment facility without court authorization
- Consenting to brain surgery to treat mental illness
- Consenting to sterilization procedures or abortions
- Consenting to convulsive treatments (e.g., electroshock therapy)
Does Having Power of Attorney Make You Financially Responsible?
Serving as a power of attorney does not make an agent personally responsible for the principal’s expenses. In other words, agents are not required to cover the principal’s costs from their own funds. The only exception is if the agent is found personally liable for harm caused by their own misconduct or breach of fiduciary duty.
Typically, agents pay the principal’s expenses using the principal’s funds. It is essential that agents keep detailed records of all transactions — including the date, amount and purpose of each expenditure — so they can provide an accurate accounting if ever required.
When Can a Power of Attorney Agent Be Held Liable?
An agent under a power of attorney can be held personally liable if they fail to act in the principal’s best interests or cause financial harm.
It’s important to note that if the principal is alive and has capacity, only they can file a claim against the agent. If the principal is incapacitated, a concerned party may bring a claim on their behalf. After the principal’s death, legal action is still possible, but typically only the personal representative of the estate, beneficiaries or heirs have standing to pursue it.
The chart below highlights common situations in which POA agents may be held liable, with examples to help you identify potential misconduct.
Type of Misconduct | What It Entails | Example |
Breach of fiduciary duty | The agent violates their fiduciary duties, failing to act with honesty, loyalty and diligence. | The agent transfers funds from a principal’s bank account to themselves without proper authority. |
Failure to perform duties | The agent fails to fulfill the responsibilities required under the POA. | The agent neglects to pay the principal’s bills for an entire month, resulting in significant late fees and interest charges. |
Overstepping of authority | The agent takes actions not authorized by the POA. | The agent sells the principal’s real estate without having authority to do so under the POA. |
Fraud | The agent uses deceptive tactics, such as misrepresentation, to benefit personally at the principal’s expense. | The agent claims to withdraw money from the principal’s account to pay a caregiver but instead keeps the funds for themselves. |
Use of POA after death | The agent continues to use the POA after the principal’s death, despite having been properly notified. | The agent drains the principal’s retirement account after being notified of the principal’s death. |
Incorrectly signed contracts | The agent fails to indicate in a legal contract that they are signing on the principal’s behalf, making themselves personally liable under the contract. | The agent signs a contract using only their own name, e.g., “John Doe,” instead of clearly identifying the principal. |
What Types of Liability Might an Agent Face?
The type of liability an agent may face for power of attorney abuse generally depends on the nature and severity of the misconduct, as well as what is required to make the principal — or their estate — whole again.
While the penalty for power of attorney abuse could include jail or prison time in extreme cases, civil penalties are more commonly used.
The most frequent civil penalties for power of attorney misconduct include:
- Damages: Reimburse the principal for financial losses caused by the agent’s actions.
- Surcharges: Punitive measures holding the agent accountable for intentional misconduct or actions taken with knowledge of potential harm to the principal.
- Court orders: Direct the agent to comply with their duties, such as producing records, providing a full accounting or taking specific actions.
- Removal: Necessary when allowing the agent to remain in their role could cause further harm. While a principal with capacity can revoke a POA to remove an agent, removal after incapacity typically requires that a petition be filed with the court.
- Attorney’s fees and costs: A successful plaintiff may attempt recovery of legal expenses from the agent responsible for the misconduct.
How a Power of Attorney Lawyer Can Help
An experienced power of attorney lawyer can provide the guidance and expertise needed to navigate any power of attorney issues with confidence. Because POAs can be complex and are generally not overseen by the court, consulting a lawyer early, before problems arise, can help prevent misunderstandings and disputes.
Below, we outline how a POA lawyer can assist agents, principals, and their families.
Clarifying POA Responsibilities
An attorney can help you fully understand your fiduciary duties and review the specific terms of the POA. This ensures all parties are clear on what the POA authorizes, limits and prohibits, helping agents act appropriately and avoid potential liability.
Investigating Suspected POA Abuse
If you suspect POA abuse, an attorney can investigate and verify your concerns. They can review financial records, accountings, and other documentation to determine whether improper actions were taken by the agent and assess the extent of any resulting harm.
Pursuing Legal Action Against POA Agents
When abuse is confirmed, an attorney can guide you through pursuing legal action. This typically begins with filing a petition in court. A skilled attorney ensures your petition is both legally compliant and compelling, increasing the likelihood of a favorable outcome.
Defending POA Agents Accused of Misconduct
If you are wrongfully accused of POA misconduct, an attorney can provide a strong defense. Allegations can carry serious financial consequences, but with professional guidance, you can protect yourself and work toward a fair resolution.
Power of Attorney Duties FAQs
Still confused about power of attorney responsibilities and liabilities? Explore the frequently asked questions below for additional guidance.
What are my power of attorney responsibilities after death?
Your primary responsibility after the principal dies is to immediately stop using the power of attorney, as POAs generally expire at death.
It is also usually appropriate to notify any institutions that relied on the POA — such as banks or investment firms — of the principal’s passing. Additionally, you should transfer any records in your possession to the personal representative, as they may be needed for estate administration.
Is a power of attorney responsible for debt?
A financial power of attorney agent may be responsible for managing and paying the principal’s debts while they are alive, but not from their own funds. After the principal’s death, responsibility for handling debts typically transfers to the personal representative of the estate.
Is a power of attorney responsible for medical bills?
A financial power of attorney agent is generally responsible for paying the principal’s medical bills while they are alive using the principal’s funds. After death, any remaining medical bills are typically handled by the personal representative of the estate.
Does medical power of attorney make you financially responsible?
No. Neither a medical nor financial POA makes the agent personally responsible for paying the principal’s expenses. A financial POA may pay medical bills using the principal’s funds, while a medical POA is limited to health care decisions.
That said, health care agents may request payment for medical care from the financial agent if one is in the picture.
What are my power of attorney obligations to family members?
Technically, you do not owe power of attorney obligations to family members — you owe duties to the principal. The existence of a familial relationship does not change an agent’s legal obligations.
While POA responsibilities may vary based on the document, all agents are held to the same fiduciary standards regardless of who the principal is.
What can a limited power of attorney do?
A limited (or special) power of attorney authorizes an agent to perform a specific task or act on the principal’s behalf for a defined period of time. Once the task is completed or the timeframe expires, the POA automatically terminates.
For example, a limited POA may be used to complete a real estate transaction or manage certain affairs while the principal is temporarily unavailable.
What are the duties of a durable power of attorney?
A durable power of attorney does not create separate duties — it simply ensures the POA remains in effect during the principal’s incapacity.
While many health care POAs are durable by default, financial POAs must be expressly designated as durable. Durable POAs are commonly used in incapacity planning to allow an agent to act without delay or court involvement if the principal becomes incapacitated.
Is a power of attorney responsible for bills?
A financial power of attorney agent is typically responsible for paying the principal’s bills while they are alive using the principal’s funds. However, the agent is not personally responsible for covering these expenses.
Is a power of attorney responsible for credit card debt?
A financial power of attorney agent may be responsible for paying the principal’s credit card bills using the principal’s funds, but they are not personally liable for the debt. After death, responsibility for repayment generally shifts to the principal’s estate.
Is a power of attorney responsible for funeral expenses?
No. Agents acting under a POA are generally not responsible for arranging or paying funeral expenses since POAs terminate automatically at death. However, if funeral arrangements are made in advance, a financial POA agent may use the principal’s funds to prepay those costs.
Is a power of attorney responsible for taxes?
Many financial POAs authorize the agent to file and pay the principal’s taxes. However, the POA document should always be reviewed, as principals may limit or restrict this authority.
Do power of attorneys get paid?
Power of attorney agents are often entitled to reasonable compensation for their services. However, the POA document may limit or define compensation, and those terms must be followed.
If the document is silent, agents may take reasonable fees. It is important they keep detailed records of their time and services in case their compensation is later questioned.
Still confused about power of attorney duties and responsibilities?
Navigating the duties of a power of attorney can be complex — especially when questions of liability or misconduct arise. Our experienced attorneys can guide agents in fulfilling their responsibilities and help principals, and their families hold agents accountable when necessary. Contact our firm today to learn more about how we can assist with your POA matter.
