powersofattorney.com ©2022
Protecting Californians.
¶ 
What is An Agent
This page examines agents under a Power of Attorney.
- Part 1 - About Agents: Scope of authority; terminology; appointment of professional agents
- Part 2 - Acceptance of Appointment: Method of accepting appointment
- Part 3 - Binding Signature: Execution by agent
- Part 4 - Obligations: Duties; fiduciary role; whether positive duty to act
- Part 5 - Entitlements & Liabilities: payment of remuneration or expenses
- An agent is an entity appointed by the principal to represent and bind the principal
- An agent's scope of authority is defined in the Power of Attorney
- An agent should not benefit from a Power of Attorney
- Terminology varies from state to state
- There are different classes of agent
- More than one agent may be appointed
- Choosing agents should be done with care
- A special word about New York
- A special word about Illinois
- Being a “prudent agent” is encouraged
- Professionals may usefully be appointed as agents
- A commercial entity may be an agent
- Minors as agents
- How an agent may accept appointment varies in the Six (6) Greater States
- Acceptance of appointment in the Six (6) Greater States
- Acceptance of appointment by successor agents & sub-agents
- Conditions can be imposed in respect of an agent's appointment
- Delay (i.e lapse of time) no obstacle to appointment
- A Power of Attorney may be presented by an agent to a third party as evidence of their authority
- The act of an agent is binding upon the principal
- An agent signs legal documents on behalf of the principal where the principal would sign
- An agent may be named as the contracting party
- Authority without authority to bind
- An agent owes various duties to the principal
- An agent owes legislative duties
- An agent is a fiduciary
- An agent's duties may vary depending if durable or non-durable Power Of Attorney
- An agent may not have a positive duty to act
- An agent must keep information confidential
- An agent may be expected to provide a copy of the Power of Attorney to a third party
- An agent may be entitled to remuneration or expenses
- Checks & balances preventing an agent abusing a Power Of Attorney are ripe for inclusion
- Agent in California & New York is entitled to certain information under statute
- Damages might work differently under a Power of Attorney as compared to a mere contract
- An agent's liabilities may be partly regulated by legislation
¶ Part 1: About Agents
¶ An Agent Is An Entity Appointed By The Principal To Represent And Bind The Principal
An ‘agent' is a legal entity designated in a Power of Attorney to exercise authority granted to the agent under the Power of Attorney, regardless of whether the person is known as an agent or attorney-in-fact, or by some other term.
Upon accepting appointment under the Power of Attorney, the agent assumes certain duties owed to the principal, with a particular emphasis upon loyalty.
Some duties owed by an agent to the principal survive (i.e. continue after) termination of the Power of Attorney, such as confidentiality obligations.
¶ Illustration
¶ Facts
Ron Smith creates a Power of Attorney under which two persons are appointed to perform tasks on his behalf.
¶ Conclusion
Ron Smith would be the principal.
The two persons appointed to perform the tasks on behalf of Ron Smith would be his appointed agents under the Power of Attorney.
The Power of Attorney might for example, also provide for the appointment of one or more successor agents to replace an agent or agents who are ineligible.
Prior to termination of the Power of Attorney, the agents may perform the tasks they are authorized to perform under the Power of Attorney.
After termination of the Power of Attorney, the agents will be obliged to keep confidential information gained during the course of their appointment.
¶ An Agent's Scope Of Authority Is Defined In The Power of Attorney
In California for example:-
- §4261 recognizes that a Power of Attorney may grant "..general authority to an [agent].. not limited to one or more express actions, subjects, or purposes for which general authority is conferred, the [agent].. [having] all the authority to act that a person having the capacity to contract may carry out through an [agent] specifically authorized to take the action.." (general authority)
- §4262 recognizes that a Power of Attorney may grant "..limited authority to an [agent], [whereby] the [agent] has the following authority: (a) ..the authority granted in the Power of Attorney, as limited with respect to permissible actions, subjects, or purposes (b) ..the authority incidental, necessary, or proper to carry out the granted authority.." (limited authority)
- §4263 recognizes that a principal may incorporate powers by reference to other statutes, including statutes dealing with guardians, conservators and trustees[1]
¶ Agents Benefitting From A Power of Attorney
An agent may be entitled to remuneration or expenses.
An agent cannot receive a benefit by virtue of exercise of authority under a Power of Attorney, unless the agent's receipt of that benefit is expressly authorized in the Power of Attorney.
An agent who benefits from the exercise of authority under a Power of Attorney in circumstances where the agent's receipt of the benefit is not expressly authorized by the Power of Attorney may be liable to account to the principal for the benefit.
¶ Terminology
¶ In California, the Term “Attorney-In-Fact” Is Preferred to "Agent"
In California the term “attorney-in-fact” is preferred to the term "agent" in legislation governing Powers of Attorney for persons[2].
In New York (§5-1501C) and Illinois (§2-3) the term “attorney-in-fact” is recognized in legislation.
In Texas, Florida and Pennsylvania the term “attorney-in-fact” is not included at all in the legislation.
Perhaps any attachment to use of the term “attorney-in-fact" continues because:-
- the title Power of Attorney contains reference to an ‘attorney’ (i.e. is not titled “Power of Agency” or “Power of Agent”)
- it is purposeful to distinguish an agent appointed under a Power of Attorney from an attorney-at-law (i.e. a lawyer)
¶ The Terms "Original" and "Initial"
Different terminology is used to distinguish a 'first appointed' agent from a successor agent who replaces a 'first appointed' agent, if the 'first appointed' agent is ineligible:[3]
- New York, Illinois, Pennsylvania and Florida prefer the term “original” agent (see §5-1501, §2-10.3, §5602(b) and §709.2102 respectively)
- California prefers the term “initial” (see §4203)
- Texas legislation refers merely to an “agent” and "co-agents", without reference to the terms ‘initial’ or ‘original’ agent
¶ There Are Different Classes of Agent
In short:-
- an original or initial agent is ‘first in line’ for appointment
- a successor agent (known as an 'alternate' agent in California) replaces an original agent who is ineligible
- in California, Texas, New York, Illinois and Pennsylvania, original agents and successor agents appear to be able to authorize the appointment of sub-agents, being prohibited in Florida[4]
Under the heading A Successor Agent Replaces An Original Agent Who Is Ineligible you can read about arrangements with respect to a successor agent replacing an original agent.
¶ More Than One Agent May Be Appointed
Other than in Illinois if a government form is used, all of the Six (6) Greater States contemplate a person creating a Power of Attorney for commercial purposes under which they may appoint more than one agent.
In Illinois, §3-3 includes the following which forms part of the notice on the front of the government form, which is echoed in §2-10.5:
“When using the Statutory Short Form, you may name successor agents, but you may not name co-agents.”
¶ Choosing Agents Should Be Done With Care
An agent should be capable of performing the tasks expected of them and trustworthy.
The article A Guide to Fiduciary Selection published in Estate Planning Developments for Texas Professionals (2014) may be of use.[5]
¶ Age Concerns
Age is a factor when deciding who to appoint as an agent, if the Power of Attorney is intended to be on foot for any substantial period of time.
Where older age is a factor, it may be useful to appoint someone younger as a successor agent, to replace them if they die or lose capacity, or include a commercial entity as an agent.
See the Case Study - 'Changing The Guard’ Upon A Date for an example illustrating the use of two Powers of Attorney to reduce concerns associated with ageing agents.
Appointing a younger person as an agent presents challenges.
Maturity may be an issue. A younger person may be more likely to move residence, go overseas or have completing commitments.
Solutions might involve for example, requiring a younger agent to act by agreement with an older agent, before they reach a certain age.
¶ How Many Agents To Appoint
Consider the following different arrangements:
| Single (appoint one agent) | A single agent involves no risk of conflict between agents and possibly greater risk of vacancy in office or unscrupulous conduct. Single agent arrangements are typically the easiest to prepare. |
| Joint (any task can only be performed by all agents in agreement) | There is no need to decide what tasks each agent may perform. Decisions are needed about whether one agent may act on their own, where all other agents are ineligible. Note: Where limitations prevent an agent from acting by agreement at all times with their co-agents the appointment cannot be a joint appointment, unless the limitations apply equally to all agents |
| Simple Several (any task may be performed independently by any agent & agents never required to agree) | This is arguably the simplest design, other than having a single agent, because there is no need to consider what tasks may be performed by any agent or what occurs if an agent is ineligible. |
| Complex Several (all task are performed independently by at least one agent, not all tasks may be performed by any agent & agents never required to agree) | This option requires the principal to decide what tasks each agent may perform. |
| Joint & Several | Any other scheme. |
¶ Other Schemes (i.e. Examples of Joint & Several Schemes)
Other schemes might involve, for example:-
- at least one task to be performed by agreement by less than all agents and independently by some or all of agents
- at least one task to be performed by agreement by all agents and independently by less than all of agents
- all tasks to be performed by agreement and independently, subject to limitations restricting certain agents performing certain task at certain times and similar
- tasks to be performed by majority (being a majority across all agents or perhaps only all agents authorized to perform the specified task, for example including different kinds of majority, such as variance as to 'percentage to make a majority' etc.)
- certain agents authorised to perform certain tasks independently, but if no agent is eligible to perform the task, the unauthorized agents may perform the tasks by agreement
- certain agents authorised to perform certain tasks independently, but if no agent is eligible to perform the task, the unauthorized agents may perform the tasks independently.
¶ A Special Word About New York
In New York a Power of Attorney “takes effect” only when all agents have accepted appointment pursuant to §5-1501B.
Notably, unlike for example, reference to "unless the principal provides otherwise" in §5-1508 (dealing with where there is a vacancy in office of agents or the authority of successor agents) words like "unless the principal provides otherwise" do not appear in §5-1501B.
That said, §5-1508 does afford discretion where an agent lacks capacity, where it results in a vacancy in office.
Provision of this kind is not seen in any of the other Six (6) Greater States.
¶ A Special Word About Illinois
In Illinois, a government form may only be used to appoint one agent (§2-10.5).
¶ Being A “Prudent Agent” Is Encouraged
The concept of the prudent agent is typically used in the context of identifying what an agent would do, if they were doing the best job.
The term “prudent” is cited in the legislation of California and New York governing Powers of Attorney for persons:-
- in California reference to an agent having a duty to do would be done by “a prudent person dealing with the property of another”:§4231
- in New York legislation provides that "an agent shall observe the standard of care that would be observed by a prudent person dealing with property of another": §5-1505
No similar provisions including the term “prudent” are found in the legislation of the remainder of the Six (6) Greater States.
Sometimes, reference may be made to the concept of the "prudent principal".
¶ Professionals May Usefully Be Appointed As Agents
A principal may appoint a professional as an agent, such as a trusted accountant or lawyer.[6]
Before naming a professional as an agent it would be prudent for a principal to confirm that the professional is willing to be appointed.
¶ Higher Standard of Care
¶ California, Florida & Pennsylvania
Higher standards of care are expressly expected of persons with special skills or expertise in California, Florida and Pennsylvania (see §4231(b) CA; §709.2114(4) FL; and §5601.3(c) PA)
In California, (§4201) provides, that lacking qualifications does not qualify the duties owed by an agent. There is no equivalent terms to §4201 in the legislation of the remainder of the Six (6) Greater States,
In Pennsylvania, legislation speaks of a principal's entitlement to expect an agent to perform in accordance with their expectations (see §5601.3(a)).
¶ Illinois, Texas and New York
Legislation in Illinois, Texas and New York contains no provision equivalent to §4231(b) §709.2114(4)and §5601.3(c) in California, Florida and Pennsylvania.
In Illinois, legislation speaks of a principal's entitlement to expect an agent to perform in accordance with their expectations (see §2-7(b)).
Common law in Illinois, Texas and New York presumably supports higher standards of care being owed by persons with special skills or expertise.
¶ Insurance
A professional appointed as an agent may have professional indemnity type insurance, which non-professional persons are unlikely to have.
¶ Remuneration
Where agents require payment, suitable provision would be included.
Words along the following lines might be included in the Power of Attorney:
“..any agent appointed under this Power of Attorney being a professional is entitled to charge and to be paid all professional and other charges for any business time expended or acts done by them as an agent in connection with the administration of my affairs relevant to this Power of Attorney..”.
Any preferred professional should ensure that such a charging clause is acceptable to them.
¶ Sub-Agency Roles For Professionals
A sub-agent may be invaluable if an agent experiences personal difficulties that prevent them performing as an agent for a period of time.
A principal might only authorize the appointment of professionals as sub-agents, in conjunction with use of class conditions.
For example, a principal might:-
- specify that any sub-agent must be a professional, over 35 years of age with at least 10 years experience
- direct that that the sub-agent be and remain employed by a preferred firm or a reputable, equivalent firm
Where sub-agents may require payment, suitable provision would be included.
A Power of Attorney might include words along the following lines:
"..any sub-agent appointed under this Power of Attorney being a professional is entitled to charge and to be paid all professional and other charges for any business time expended or acts done by them as a sub-agent in connection with the administration of my affairs relevant to this Power of Attorney..”.
¶ A Commercial Entity May Be An Agent
In five (5) of the Six (6) Greater States, legislation appears to provide for the appointment of a commercial entity as an agent under a Power of Attorney for a person.
Where a Power of Attorney for a person is excluded from the ambit of the legislation, there are no restrictions upon the Power of Attorney being used to appoint a commercial entity as an agent.
In many states, special requirements apply to any corporate-style entity (i.e. corporation, company or trust) seeking to exercise fiduciary functions.[7]
| California | “Attorney-in-fact"” is defined to include a “person” granted authority to act for the principal (see §4014). The term “person” is defined as an ”individual, corporation, government or governmental subdivision or agency, business trust, estate, trust, partnership, limited liability company, association, or other entity." (see §56). Only a person having the capacity to contract is qualified to act as an attorney-in-fact: §4200.[8] The following extract from the 1994 California Law Revision Commission Report which led to enactment of Division 4.5 of the Probate Code is informative, speaking of law as it was prior to the amendments and proposed changes "Existing law imposes no particular qualifications on who may be an.. [agent] under a Power of Attorney for property, although special restrictions apply in the case of a durable Power of Attorney for health care. At a minimum, the..[agent] should be a person with the capacity to contract. The proposed law provides that any person (including both natural persons and artificial entities, see §56) having the capacity to make a contract may be an.. [agent]." |
| Texas | Legislation does not govern non-durable Powers of Attorney, although it seems accepted a commercial entity may be appointed as an agent under a non-durable Power of Attorney. In respect of a durable Power of Attorney, §751.0021 states "..an instrument is a durable Power of Attorney for purposes of this subtitle if the instrument ..designates another person as agent.." and §22.027 provides that “person” includes a natural person and a corporation. Nonetheless, views may differ as to whether a commercial entity may be appointed as an agent under a durable Power of Attorney, discussed further below. |
| New York | §1501 defines an agent as "..a person granted authority to act as attorney-in-fact for the principal under a power of attorney, and includes the original agent and any co-agent or successor agent.." and §1501 defines a "person" as ".. an individual, whether acting for himself or herself, or as a fiduciary or as an official of any legal, governmental or commercial entity (including, but not limited to, any such entity identified in this subdivision), corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, government, governmental subdivision, government agency, government entity, government instrumentality, public corporation, or any other legal or commercial entity.." |
| Florida | §709.2102 defines an agent as "..a person granted authority to act for a principal under a power of attorney, whether denominated an agent, attorney in fact, or otherwise.." and §101 defines “person” to include "..individuals, children, firms, associations, joint adventures, partnerships, estates, trusts, business trusts, syndicates, fiduciaries, corporations, and all other groups or combinations..". |
| Illinois | §2-3 defines an agent as "..a person designated to act for the principal in the agency.." and §2-3 defines the term “person” to include "..an individual, corporation, trust, partnership or other entity, as appropriate to the agency..". |
| Pennsylvania | §5601(f) defines an agent as "..a person designated by a principal in a power of attorney to act on behalf of that principal.." and "person" is defined in §1991 to include "..a corporation, partnership, limited liability company, business trust, other association, government entity (other than the Commonwealth), estate, trust, foundation or natural person.." |
In states where a commercial entity may be appointed as an agent and an agent is entitled to remuneration under legislation, a market may exist for commercial entities to provide agent services in exchange for a right to remuneration.
¶ Minors As Agents
As to whether a minor might be appointed as an agent under a non-durable Power of Attorney, the position may be different in each of the Six (6) Greater States.
If we look at Texas:-
- it seems reasonable if the individual falls within one of the two exceptions to the general rule that persons under eighteen (18) years of age arising under §22.022
- §22.022 removes the minority status of a person under eighteen (18) years of age who is or has been married or has had their minority status ended by a Court
- there may be debate as to whether for example, a person who is a minor at the time they are named as an agent in a non-durable Power of Attorney who subsequently achieves majority before they come to be authorized to exercise any authority as an agent (for example, where a Power of Attorney authorizes them to exercise authority after a certain future date or they are appointed as a successor agent)
In California, only a person having the capacity to contract is qualified to act as an attorney-in-fact: §4200.[9]
The position would need to be investigated further in each of the Six (6) Greater States.
For example, it may be possible to appoint a minor as an agent where a Power of Attorney does not commence before they achieve majority.
¶ Part 2: Acceptance of Appointment
¶ 
How An Agent May Accept Appointment Varies In The Six (6) Greater States
The Six (6) Greater States approach how an agent may accept appointment under a Power of Attorney for a person[10] differently.
Strong records with respect to appointment and termination are important, to ensure that at any time it is clear who is or is not appointed as an agent.
Knowing who is or is not appointed as an agent at any time might be important for example:-
- for the benefit of an agent who is appointed at any given time, or indeed any protector in those states a protector may be appointed, for whom the question of whom is appointed (including agents, successor agents and sub-agents etc.) is likely to be relevant at all times
- in the context of determining any claims for remuneration and expenses
- in the event of mismanagement of the affairs of the principal and questions arising as to whom may be responsible for any such problems
- in the context of notifice requirements imposed on an agent, successor agent or sub-agent, for example to notifying other agents, successor agents or sub-agents of their appointment, undertaking of major transactions etc.
This is particularly so in California, Florida, Illinois and in Texas because as explained in more detail below, in these states there is no express requirement for an agent to sign a Power of Attorney to accept appointment and in some instances, the right of an agent to accept appointment 'by conduct' is expressly recognized.
By contrast in New York and Pennsylvania, an agent appointed under a Power of Attorney for a person[11] must sign a Power of Attorney to accept appointment (see below).
¶ Acceptance of Appointment In the Six (6) Greater States
¶ California
In California with respect to Powers of Attorney for a person:[12]
- a prescribed method of appointment is not found other than as referred to in the mandatory notice in §4128
- a mandatory notice is required to be attached to all Powers of Attorney (§4128) other than in certain limited circumstances (§4102) and includes provision for the agent to sign (without provision for witnessing)
- the notice commences with the words: “By acting or agreeing to act as the agent..”
The extract above from the mandatory notice suggests that an agent may accept appointment by conduct or signing the Power of Attorney, unless the Power of Attorney provides otherwise. Where the acceptance by conduct is not preferred, the principal might consider the importance of recording a clear direction for example, explaining that notwithstanding the content of the mandatory notice, an agent may not accept appointment by conduct.
Whether any acceptance of appointment is limited to the extent to which an agent's assertions or conduct manifest acceptance, if acceptance by conduct is permissible:-
- may not be an easy question to answer
- unlike Florida where §709.2113 deals with this issue, there is no equivalent provision in California
- lawyers opinions may differ
¶ Texas & Florida
§709.2113 in Florida (in respect of a Power of Attorney for a person that is not excluded from the ambit of the legislation[13]) and §751.022 in Texas (in respect of durable Powers of Attorney that is not excluded from the ambit of the legislation[14]):-
- an agent may accept appointment by conduct, that is “by exercising authority or performing duties as an agent or by any other assertion or conduct indicating acceptance of the appointment”
- in Florida and Texas, the ability of an agent to accept appointment by conduct may be varied by the terms of the Power of Attorney
In Florida (not Texas), legislation provides that “the scope of an agent's acceptance is limited to those aspects of the power of attorney for which the agent's assertions or conduct reasonably manifests acceptance” (see §709.2113).
As to whether acceptance of appointment is limited to the extent to which an agent's assertions or conduct manifest acceptance in Texas:-
- this may not be an easy question to answer
- unlike Florida where §709.2113 deals with this issue, there is no equivalent provision in Texas
- lawyers opinions may differ
¶ New York
In New York with respect to Powers of Attorney for a person,[15] a Power of Attorney must be signed and dated by any agent acting on behalf of the principal with the signature of the agent duly acknowledged in the manner prescribed for the acknowledgment of a conveyance of real property (see §5-1501B & Article 9, §298).
If a government form is used, a mandatory acknowledgement must be signed by an agent.
¶ Illinois
In Illinois with respect to Powers of Attorney for a person,[16] reference is made in legislation to signing of the government form, however the legislation otherwise makes no mention of any requirement for an agent to sign a Power of Attorney.
§3-3 states:
Non-statutory property powers (i) must be executed by the principal, (ii) must designate the agent and the agent's powers, (iii) must be signed by at least one witness to the principal's signature, and (iv) must indicate that the principal has acknowledged his or her signature before a notary public. However, non-statutory property powers need not conform in any other respect to the statutory property power.
¶ Pennsylvania
In Pennsylvania in respect of a Power of Attorney for a person,[17] an agent must complete an Acknowledgement as set out in §5601(d) and affix the Acknowledgement to the Power of Attorney.
The Acknowledgment reads:
An agent shall have no authority to act as agent under the power of attorney unless the agent has first executed and affixed to the power of attorney an acknowledgment in substantially the following form:
I, [INSERT NAME], have read the attached power of attorney and am the person identified as the agent for the principal. I hereby acknowledge that when I act as agent:
I shall act in accordance with the principal's reasonable expectations to the extent actually known by me and, otherwise, in the principal's best interest, act in good faith and act only within the scope of authority granted to me by the principal in the power of attorney.
……………………………
(Agent)
……………………………
(Date)
¶ Acceptance Of Appointment By Successor Agents & Sub-Agents
Care should be taken to ensure that a Power of Attorney deals properly with acceptance of appointment by successor agents or sub-agents, as applicable.
It may be useful for example, to include provisions dealing with any successor agent or sub-agent:-
- delivering a copy of of the signed Power of Attorney to the principal
- notifying other agents, successor agents or sub-agents of their appointment
¶ Conditions Can Be Imposed In Respect Of An Agent's Appointment
Conditions control the right of a candidate to be appointed as an agent so as to for example:-
- prevent any sub-agent being appointed unless they satisfy certain class conditions
- require a candidate to have completed a certain qualification
See the heading Using Conditions to Control Outcomes for more insight.
such as a grandchild appointed as a successor agent on terms that if they sign the Power of Attorney they become entitled to have education costs paid and similar (click here to read more about this sort of arrangement)
You can read more about conditions of appointment on the page of this Wiki titled Conditions.
¶ Delay (i.e. Lapse Of Time) Is No Obstacle To Acceptance
Within the Six (6) Greater States, only Texas (in respect of non-durable Powers of Attorney) and Florida have not included in their legislation governing Powers of Attorney for a person[18] a provision along the following lines:-
“A power of attorney.. is not invalid solely because there has been a lapse of time between the date of acknowledgment of the signature of the principal and the date or dates of acknowledgment of the signature or signatures of any agent or agents or successor agent or successor agents authorized to act on behalf of the principal”
See: CA:§4127; NY:§5-1501B; IL:§2-5; PA:§5604; TX (durable only) §751.132.
In New York, §5-1501B also speaks of a lapse of time between the Power of Attorney being signed by the principal and the principal becoming incapacitated.
As to whether the legislation referred to above recognizing delay in appointment as improper grounds to dispute the validity of an agent's appointment is a reflection of the common law, equally applying to a Power of Attorney for a commercial entity or otherwise for purposes outside the ambit of the legislation, views may differ.
¶ REFERENCES (Lapse of Time Provisions)
| California | §4102 identifies when a Power Of Attorney must contain a notice pursuant to §4128. "..unless a power of attorney states a time of termination, the authority of the attorney-in-fact is exercisable notwithstanding any lapse of time since execution of the power of attorney.." (see §4127). |
| Texas | In resect of a durable Power of Attorney §751.132 deals lapse of time. It states: "..unless the durable Power of Attorney otherwise provides, an agent's authority may be exercised until the agent's authority terminates under Subsection (a), notwithstanding a lapse of time since the execution of the power of attorney." Legislation does not govern non-durable Powers of Attorney in Texas. |
| New York | §5-1501B deals with lapse of time, stating:- "A power of attorney executed pursuant to this section is not invalid solely because there has been a lapse of time between the date of acknowledgment of the signature of the principal and the date or dates of acknowledgment of the signature or signatures of any agent or agents or successor agent or successor agents authorized to act on behalf of the principal or because the principal became incapacitated during any such lapse of time.." |
| Florida | There is no provision in the legislation of Florida dealing with lapse of time. |
| Illinois | §2-5 deals with lapse of time, stating: "..unless the agency states an earlier termination date, the agency continues until the death of the principal, notwithstanding any lapse of time, the principal's disability or incapacity or appointment of a guardian for the principal after the agency is signed..." |
| Pennsylvania | §5604 deals with lapse of time, stating:"..unless the power of attorney states a time of termination, it is valid notwithstanding the lapse of time since its execution.." |
¶ Part 2B: Resignation By An Agent
Insert resignation
¶ Part 3: Binding Signature
¶ An Agent Presents A Power of Attorney To A Third Party
An agent typically presents a Power of Attorney to a third party as evidence of their authority.
For example, an agent might present a Power of Attorney to:-
- a vendor of goods or supplier of services, sales agent, financial institution, insurance company, government or credit agency with whom the agent seeks to enter dealings, that is, dealings in their capacity as an agent of the principal
- an entity that is holding or managing assets or information on behalf of the principal, such as a trustee, broker, lawyer or accountant
In five (5) of the Six (6) Greater States (Illinois being the exception) a third party may be obliged to do business with an agent appointed under a Power of Attorney for a person[19] unless they satisfy various limited grounds for exemption, although:-
- in California and New York this obligation does not arise unless the Power of Attorney is a government form
- in Texas these obligations only arise in respect of a durable Power of Attorney.
¶ The Act Of An Agent Is Binding Upon The Principal
It is often said that ‘the act of an agent is binding upon the principal'.
This is the equivalent of saying that ‘the actions of an agent, as the representative of the principal, will be effective so as to render a principal legally bound by those actions’.
For example, if an agent was to sign a contract on behalf of the principal, the principal would be bound by the contract as if they had signed the contract themselves.
This principle is codified in the legislation of many of the Six (6) Greater States governing Powers of Attorney for persons:[20]
| California | (in respect of a durable Power of Attorney) §4125 states “..all acts done by an attorney-in-fact pursuant to a durable Power of Attorney during any period of incapacity of the principal have the same effect and inure to the benefit of and bind the principal and the principal's successors in interest as if the principal had capacity..” |
| Texas | (in respect of a durable Power of Attorney) §751.051 states “..an act performed by an agent under a durable Power of Attorney has the same effect and inures to the benefit of and binds the principal and the principal's successors in interest as if the principal had performed the act..” |
| New York | Legislation includes references to ‘binding effect’ in various contexts but does not include any overarching provision |
| Florida | §709.2201 states “.. an act performed by an agent pursuant to a Power of Attorney has the same effect and inures to the benefit of and binds the principal and the principal's successors in interest as if the principal had performed the act..” |
| Illinois | (in respect of a durable Power of Attorney) §5604 states “..all acts done by an agent pursuant to a durable Power of Attorney during any period of disability or incapacity of the principal have the same effect and inure to the benefit of and bind the principal and his successors in interest as if the principal were competent and not disabled.." |
| Pennsylvania | in Illinois, §2-6 states “..all acts of the agent within the scope of the agency during any period of disability, incapacity or incompetency of the principal have the same effect and inure to the benefit of and bind the principal and his or her successors in interest as if the principal were competent and not a person with a disability..” |
¶ An Agent Signs Where The Principal Would Sign
§5-1507 in New York is an interesting read for anyone considering the procedure with respect to how an agent should execute documents on behalf of the principal under a Power of Attorney for a person.[21]
Consistent with the approach in New York, it seems good practice for an agent to:-
- insert words to the effect “Michael Jones as agent on behalf of Bill Smith - pursuant to POA dated 17 June 2020” where the principal's name and signature are expected to be placed
- insert their own signature in the signature space, adjacent to these words
For example, if a principal was a lessor or lessee, or perhaps opening a bank account, the agent would arrange for relevant documents to name the principal as the account holder, lessor or lessee and the agent would sign the relevant documents where the principal's signature would otherwise be expected to be placed, noting details of their appointment as an agent next to their signature.
¶ An Agent May Be Named As The Contracting Party
A prudent agent would have reservations about naming themselves as the contracting party in circumstances where the principal's name could appear on the contract.
Naming themselves as the contracting party might frustrate the principal's interests.
Concerns may include potential breach of an agent's duty to ensure it is always clear what constitutes the agent's property and the property of the principal.
There may be instances where it is appropriate for an agent to enter a contract for the principal using their own name, as the contracting party.
A good rule of thumb for an agent might be..
‘..it is probably inappropriate for a contract to be in an agent’s name, unless it is impossible to arrange for the contract to bear the principal's name and it is in the best interests of the principal that the contract be signed..'
¶ Authority Without Authority to Bind
It is possible to craft a Power of Attorney that does not include authority for an agent to legally bind the principal either in a specific sense, or generally.
For example, where a principal wants to authorize an agent to consult a real estate agent on their behalf, without authority to sign anything so as to bind the principal.
This would need to either be spelt out expressly in the Power of Attorney or otherwise obvious from its terms, given that binding authority is typically assumed.
¶ Part 4: Obligations
¶ An Agent Owes Various Duties To The Principal
As a consequence of accepting appointment, an agent under a Power of Attorney becomes a fiduciary.
As a fiduciary an agent must act in the best interests of the principal at all times.
The position is perhaps slightly different in Pennsylvania in respect of a Power of Attorney for a person[22].
¶ Legislation Sets Out Various Duties Owed By An Agent
Below is a rough, incomplete account of the express, legislative duties found in the legislation of the Six (6) Greater States:-
- Keep Records and Accounts (CA, NY, FL, PA)
- Deliver Up of Records & Accounts At Termination of Office (CA)
- Not Conceal A Breach of Fiduciary Duty By Another Agent (CA, FL, IL)
- Apply Any Special Skills Or Expertise (CA, FL)
- Apply The Standard of Care Observed By a Prudent Person Dealing With The Property of Another (CA)
- Act Solely In the Interests Of The Principal (CA)
- Act In a Manner Contrary To The Principal's Best Interests (FL, IL)
- Avoid Conflicts With Caveat Upon Assumption of Violation (CA, NY, PA)
- Keep Property Separate (CA, NY, PA)
- Keep property controlled by the agent (NY)
- Communicate (CA)
- Follow Instruction (CA, NY)
- Not Disobey A Principal With Court Approval (CA)
- Not Act Contrary To Expectation (FL, IL, PA)
- Act in Good Faith (FL, IL, PA)
- Act For The Benefit of the Principal (IL)
- No Obligation To Review Actions of Predecessor Agent Or Claim (FL)
- Act Loyally For The Sole Benefit Of The Principal (FL, PA)
- Act With Care, Competence and Diligence Exercised By Agents in Similar Circumstances (FL, PA)
- Cooperate With Non-Commercial Decisions Makers (FL, PA)
- Preserve The Principal's Estate Plan (FL, TX, PA)
These duties are further addressed in the legislation.
The non-inclusion of any of the listed duties in a given state is not indicative that a particular obligation does or does not arise in that state.
There are good arguments in favour of all the obligations listed above being imposed upon all agents, as opposed to any other approach.
The articles Fiduciary Duty - Liability of the Fiduciary, Mountz & Rivers, Paper Presented at 26th Annual Advanced Civil Trial Course, 2003 written for Texas some years ago is a useful, brief introduction to the concept of a fiduciary.
Importantly, the Third Restatement of the Law of Agency by the American Law Institute (2006) touches on the following additional duties, not mentioned above:
- Engage in Good Conduct
- Give Information
- Render Accounts
- Not Attempt the Impossible or Impractical
- Not Act After Termination
- Account for Profits Arising Out of Employment
- Not Act for an Adverse Party
- Not Intermingle Property
More Insight About California
The following extract from the 1994 California Law Revision Commission Report which led to enactment of Division 4.5 of the Probate Code is informative, speaking of law as it was prior to the amendments and proposed changes (footnotes are in brackets):
The Power of Attorney statutes do not provide any set of duties for the guidance of.. [agents], even though an.. [agent] will normally be a nonprofessional. The general agency statutes provide insufficient guidance. A few duties are scattered amongst the general agency statutes, such as the obligations not to exceed actual authority, to keep the principal informed, and not to commit fraud on the principal. (Civ. Code §§ 2019, 2020, 2306.) The agency statutes also forbid violation of a number of duties applicable to trustees. (See Civ. Code § 2322(c), forbidding violation of duties of trustee under Prob. Code; §§ 16002, duty of loyalty, 16004, duty to avoid conflict of interest,, 16005, duty not to undertake adverse trust, 16009, duty to keep trust property separate and identified) Agents’ duties have been fleshed out by commentators and the courts by reference to the Restatement on Agency and the duties of trustees. (See, e.g., 2 B. Witkin, Summary of California Law Agency and Employment §§ 41, 43, 48, 9th ed. 1987; Montgomery & Wright, Durable Powers of Attorney for Property Management, in 1991 California Durable Power of Attorney Handbook §§ 2.64-2.67, at 67-71, Cal. Cont. Ed. Bar). But these sources will not be of much assistance to a friend or relative undertaking responsibilities under a durable power of attorney.
Other fiduciary laws typically provide a list of basic duties, such as the statutes applicable to guardians and conservators, (see generally Prob. Code §§ 2350-2595) custodians under the Uniform Transfers to Minors Act, (Prob. Code § 3912) personal representatives, (Prob. Code § 9600 et seq.) and trustees (Prob. Code § 16000 et seq.). The Commission believes that it is appropriate to set out in the statute the basic duties of an.. [agent] under a Power of Attorney. The duties in the proposed law have been drawn from existing agency law, from the Trust Law, and from the relevant laws in other states. The proposed law provides a number of explicit duties: a duty of care and skill, a duty of loyalty, a duty to keep the principal’s property separate and identified, a duty to keep the principal informed and follow instructions, a duty to consult with other persons designated by the principal, a duty to keep records of transactions on behalf of the principal, a duty to use special skills, and a duty to deliver property to appropriate persons on termination of the.. [agent’s] authority.
Standard of Care
The existing agency rules do not provide a positive statement of a standard of care. The courts, however, have read the statutes to impose a fiduciary standard on.. [agents], typically the standard applicable to trustees. (See cases cited in 2 B. Witkin, Summary of California Law Agency and Employment §§ 41, 9th ed. 1987) The standard of care for trustees has undergone revision from time to time since the general principle analogizing attorneys-in-fact to trustees was laid down. (for background, see Selected 1986 Trust and Probate Legislation, 18 Cal. L. Revision Comm’n Reports 1201, 1238-42, 1986). Much of trust law is influenced by the skilled property management and investment services professional trustees are expected to provide.
The situation of a typical.. [agent] under a Power of Attorney for property is more analogous to a custodian under the Uniform Transfers to Minors Act (see Prob. Code § 3912(b)) than to a trustee. Accordingly, the proposed law provides a nonprofessional fiduciary standard of care as a general rule. This standard requires the.. [agent] to observe the standard of care that would be observed by a prudent person dealing with property of another. If the.. [agent] is not compensated, the.. [agent] is not liable for losses to the principal’s property unless the losses result from the.. [agent’s] bad faith, intentional wrongdoing, or gross negligence. However, if the.. [agent] has special skills or was designated as an.. [agent] on the basis of representations of special skills, the.. [agent] is required to observe the standard of care that would be observed by those with similar skills. (This rule is consistent with the general rule concerning expert fiduciaries stated in the cases. See the discussions in Estate of Collins, 72 Cal. App. 3d 663, 673, 139 Cal. Rptr. 644 (1977); Coberly v. Superior Court, 231 Cal. App. 2d 685, 689, 42 Cal. Rptr. 64 (1965); Estate of Beach, 15 Cal. 3d 623, 635, 542 P.2d 994, 125 Cal. Rptr. 570 (1975) - bank as executor; see also Prob. Code § 2401 Comment, standard of care applicable to professional guardian or conservator of estate; Prob. Code § 3912 Comment, standard of care applicable to professional fiduciary acting as custodian under California Uniform Transfers to Minors Act; Prob. Code § 16040 & Comment, standard of care applicable to expert trustee)."
¶ Case Study - Duty To Keep Accounts
An examination of how the legislation operates regarding obligations with respect to the keeping records, produce records and provide accounts illustrates how duties may work differently in different states.
¶ Duty to Keep Records
| California | "The attorney-in-fact shall keep records of all transactions entered into by the attorney-in-fact on behalf of the principal": §4236 |
| Texas | "The agent shall maintain records of each action taken or decision made by the agent": §751.103 |
| New York | "An agent acting under a power of attorney has a fiduciary relationship with the principal. The fiduciary duties include but are not limited to .. keep a record of all receipts, disbursements, and transactions entered into by the agent on behalf of the principal": §5-1505 |
| Florida | "An agent .. must keep a record of all receipts, disbursements, and transactions made on behalf of the principal": §709.2114 |
| Illinois | "An agent shall keep a record of all receipts, disbursements, and significant actions taken under the authority of the agency": §2-7 |
| Pennsylvania | “an agent shall.. keep a record of all receipts, disbursements and transactions made on behalf of the principal”: §5601.3(d) |
¶ Production of Records
| California | “The following persons are entitled to examine and copy the records kept by the attorney-in-fact: (1) the principal, (2) the conservator of the estate of the principal while the principal is living; (3) the principal's personal representative or successor in interest after the death of the principal; (4) any other person, pursuant to court order..”: §4236 |
| Texas | "The principal may demand an accounting by the agent [see below]…the agent shall also provide to the principal all documentation regarding the principal's property": §751.104 |
| New York | "An agent acting under a power of attorney has a fiduciary relationship with the principal. The fiduciary duties include but are not limited to .. keep a record of all receipts, disbursements, and transactions entered into by the agent on behalf of the principal and to make such record and power of attorney available to the principal or to third parties at the request of the principal": §5-1505 |
| Florida | "Except as otherwise provided in the power of attorney, an agent is not required to disclose receipts, disbursements, transactions conducted on behalf of the principal.. unless ordered by a court or requested by the principal, a court-appointed guardian, another fiduciary acting for the principal, a governmental agency having authority to protect the welfare of the principal, or, upon the death of the principal, by the personal representative or successor in interest of the principal’s estate": §709.2114 |
| Illinois | "(c) An agent shall keep a record of all receipts, disbursements, and significant actions taken under the authority of the agency and shall provide a copy of this record when requested to do so by: (1) the principal, a guardian, another fiduciary acting on behalf of the principal, and, after the death of the principal, the personal representative or successors in interest of the principal's estate; (2) a representative of a provider agency, as defined in Section 2 of the Adult Protective Services Act, acting in the course of an assessment of a complaint of elder abuse or neglect under that Act; (3) a representative of the Office of the State Long Term Care Ombudsman, acting in the course of an investigation of a complaint of financial exploitation of a nursing home resident under Section 4.04 of the Illinois Act on the Aging; (4) a representative of the Office of Inspector General for the Department of Human Services, acting in the course of an assessment of a complaint of financial exploitation of an adult with disabilities pursuant to Section 35 of the Abuse of Adults with Disabilities Intervention Act; (5) a court under Section 2-10 of this Act; or (6) a representative of the Office of State Guardian or public guardian for the county in which the principal resides acting in the course of investigating whether to file a petition for guardianship of the principal under Section 11a-4 or 11a-8 of the Probate Act of 1975": §2-7 |
| Pennsylvania | “Except as otherwise provided in the Power of Attorney, an agent shall not be required to disclose receipts, disbursements or transactions conducted on behalf of the principal unless ordered by a court or requested by the principal, a guardian, conservator, another fiduciary acting for the principal, governmental agency having authority to protect the welfare of the principal or, upon the death of the principal, the personal representative or successor in interest of the principal's estate”: §5601.3 |
¶ Provision Of Account
| California | “The attorney-in-fact does not have a duty to make an account of transactions entered into on behalf of the principal, except in the following circumstances: (1) at any time requested by the principal; (2) where the power of attorney requires the attorney-in-fact to account and specifies to whom the account is to be made; (3) on request by the conservator of the estate of the principal while the principal is living; (4) on request by the principal's personal representative or successor in interest after the death of the principal; (5) pursuant to court order..”: §4236 |
| Texas | "The principal may demand an accounting by the agent. (b) Unless otherwise directed by the principal, an accounting under Subsection (a) must include: (1) the property belonging to the principal that has come to the agent's knowledge or into the agent's possession; (2) each action taken or decision made by the agent; (3) a complete account of receipts, disbursements, and other actions of the agent that includes the source and nature of each receipt, disbursement, or action, with receipts of principal and income shown separately; (4) a listing of all property over which the agent has exercised control that includes: (A) an adequate description of each asset; and (B) the asset's current value, if the value is known to the agent; (5) the cash balance on hand and the name and location of the depository at which the cash balance is kept; (6) each known liability; and (7) any other information and facts known to the agent as necessary for a full and definite understanding of the exact condition of the property belonging to the principal...": §751.104 |
| New York | "An agent acting under a power of attorney has a fiduciary relationship with the principal. The fiduciary duties include but are not limited to .. keep a record of all receipts, disbursements, and transactions entered into by the agent on behalf of the principal and to make such record and power of attorney available to the principal or to third parties at the request of the principal": §5-1505 |
| Florida | "Except as otherwise provided in the power of attorney, an agent is not required to disclose receipts, disbursements, transactions conducted on behalf of the principal.. unless ordered by a court or requested by the principal, a court-appointed guardian, another fiduciary acting for the principal, a governmental agency having authority to protect the welfare of the principal, or, upon the death of the principal, by the personal representative or successor in interest of the principal’s estate": §709.2114 |
| Illinois | "(c) An agent shall keep a record of all receipts, disbursements, and significant actions taken under the authority of the agency and shall provide a copy of this record when requested to do so by: (1) the principal, a guardian, another fiduciary acting on behalf of the principal, and, after the death of the principal, the personal representative or successors in interest of the principal's estate; (2) a representative of a provider agency, as defined in Section 2 of the Adult Protective Services Act, acting in the course of an assessment of a complaint of elder abuse or neglect under that Act; (3) a representative of the Office of the State Long Term Care Ombudsman, acting in the course of an investigation of a complaint of financial exploitation of a nursing home resident under Section 4.04 of the Illinois Act on the Aging; (4) a representative of the Office of Inspector General for the Department of Human Services, acting in the course of an assessment of a complaint of financial exploitation of an adult with disabilities pursuant to Section 35 of the Abuse of Adults with Disabilities Intervention Act; (5) a court under Section 2-10 of this Act; or (6) a representative of the Office of State Guardian or public guardian for the county in which the principal resides acting in the course of investigating whether to file a petition for guardianship of the principal under Section 11a-4 or 11a-8 of the Probate Act of 1975": §2-7" |
| Pennsylvania | “Except as otherwise provided in the Power of Attorney, an agent shall not be required to disclose receipts, disbursements or transactions conducted on behalf of the principal unless ordered by a court or requested by the principal, a guardian, conservator, another fiduciary acting for the principal, governmental agency having authority to protect the welfare of the principal or, upon the death of the principal, the personal representative or successor in interest of the principal's estate”: §5601.3(d) |
¶ Deadline For Providing Accounts
| California | A petition may be filed .. if the [agent] has failed to submit an accounting or report within 60 days after written request from the person filing the petition (§4541) |
| Texas | In Texas the ‘deadline date’ for production of accounts by an agent (albeit in only in respect of a durable Power of Attorney) is 60 days (§751.105) although there is no such deadline or obligation exists in Texas in respect of a non-durable Power of Attorney, because in Texas there is no legislation governing non-durable Powers of Attorney. |
| New York | Accounts must be produced within 15 days (§5-1505) |
| Florida | Accounts must be produced within 60 days with a notable further 60 day extension (§709.2114 |
| Illinois | Accounts must be produced within 21 days (§2-7) |
| Pennsylvania | Accounts must be produced within 30 days (§5601.3(d) |
Failure to comply with the ‘deadline’ for the production of accounts cited above varies from state to state, addressed in more detail on a state-by-state basis under the heading 'Some Handy References' below.
¶ An Agent Is A Fiduciary
In California, Texas, New York and Florida, legislation expressly records that an agent under a Power of Attorney for a person[23] is a fiduciary.
In California, §39 of the Probate Code provides:-
""Fiduciary” means personal representative, trustee, guardian, conservator, attorney-in-fact under a power of attorney..."
In Texas, an agent under a Power of Attorney for a person[24] is a fiduciary “only when acting as an agent under the Power of Attorney” which might mean for example, that someone identified as a potential successor agent does not owe a fiduciary duty unless and until they are appointed, although a wise principal might consider how they protect their interests for example, in the context of a successor agent agreeing to act in the future, or an agent under a durable Powers of Attorney accepting appointment on terms that mean they do not perform any task unless and until the principal loses capacity, accepting that a principal may prefer for example, that an agent avoid conflicts of interest pending them perhaps becoming authorized to perform any task and would for example, expect an agent to keep confidential any information provided to them by the principal prior to that point in time.
In Illinois, express recognition of an agent as a fiduciary under a Power of Attorney for a person[25] is not found in the legislation, however the existence of a fiduciary type duty are for example, found in provisions dealing with obligations to report and not conceal a breach of fiduciary duty by another agent, which assume the existence of a fiduciary duty: §2-10.3; §2-10.5.
In Pennsylvania under a Power of Attorney for a person:[26]
- a previously included provision dealing with the existence of a fiduciary duty was deleted from the legislation in 2014
- no provision is included in the legislation to the effect that a fiduciary duty does not arise
- many legislative duties contained in the legislation when read together seem tantamount to imposing a fiduciary duty, leaving a question as to whether an agent owes a fiduciary duty to the principal, despite the absence of reference to same in the legislation, for example, similar to a fiduciary, an agent has obligations to act loyally for the benefit of the principal, avoid conflicts, keep their property separate, communicate and follow instruction, act within the scope of their authority and similar (§5601.3(b))
The denotation of an agent under a Power of Attorney as a fiduciary flavors the answer to any question pertaining to the obligations of an agent.
As a fiduciary, an agent is charged with an all encompassing obligation to exercise authority at all times under the Power of Attorney so as to:-
- put the interests of the principal before their own interests
- actively avoid putting themselves in a position where their interests may conflict with the interests of the principal
- always act in the best interests of the principal
There is no perfect statement that captures the full measure of a fiduciary duty in terms of precisely what an agent must do or not do in specific terms, the intention behind a widely expressed, all encompassing duty to act in the best interests of the principal being more effective than for example, to specify that an agent keep accounts, keep property separate and similar, because by expressing the duty in wide, all encompassing terms it ensures that in every situation it is easy to identify what would constitute fulfillment of the duty.
Anyone looking to better understand the law pertaining to fiduciary duties may benefit from reading articles like Fiduciary Duty - Liability of the Fiduciary, Mountz & Rivers, Paper Presented at 26th Annual Advanced Civil Trial Course, 2003 which was written for Texas but remains useful in terms of understanding generally how fiduciary duties work, that is, in Texas and in other states.
¶ Under an Irrevocable Power of Attorney Things Usually Work Differently
An agent does not owe a fiduciary duty to a principal under an irrevocable Power of Attorney, an irrevocable Power of Attorney being by definition, intended to benefit the agent to the obvious, potential detriment of the principal.
For example, a principal might grant an irrevocable Power of Attorney to a lender that entitles the lender to take steps on behalf of the principal to:-
- transfer property to themselves, if a loan is not repaid
- collect debts on the borrower's behalf and have the benefit of the monies collected from the borrower's creditors
¶ An Agent's Duties May Vary Depending If Durable Or Non-Durable Power Of Attorney
The duties owed by an agent may be informed by whether the Power of Attorney is durable or non-durable and whether the principal has capacity.
In some of the Six (6) Greater States, legislation authorizes an agent to act outside the scope of their written authority in dire circumstances, although an agent may or may not be obliged to exercise this additional authority.
In Pennsylvania, there may be tension between the express exclusion of a positive duty to act (see §5601(c)) and the duty of an agent to preserve the principal's estate plan (see §5601.3(b)).
¶ An Agent May Not Have A Positive Duty to Act
Whether an agent has a positive duty to act is a question which seems to have different answers in different states.
Practically speaking, in California, Texas, New York, Florida and Illinois it would likely be best for a principal to include clear terms in a Power of Attorney dealing with when an agent must act to ensure the position is clear.
In Pennsylvania the position is different in respect of a Power of Attorney for a person,[27] because §5601(c) requires a notice to be attached to all Powers of Attorney for a person[28] which states:
“This power of attorney does not impose a duty on your agent to exercise granted powers, but, when powers are exercised, your agent must use due care to act for your benefit and in accordance with this power of attorney.”
This creates a difficulty in Pennsylvania in respect of a Power of Attorney for a person,[29] because:-
- the notice in §5601(c) does not say ‘unless contrary terms are recorded in the Power of Attorney’
- no overarching legislative principle of the kind seen in §2-4 in Illinois or §4101 in California assists on the question of whether the effect of the legislation may be overridden by express terms in a Power of Attorney
- it may be difficult to suggest that the exclusion of a positive duty to act per the mandatory notice is able to be varied by express terms recorded in a Power of Attorney
¶ What Are The Considerations When Determining The Existence Of A Positive Duty To Act
When determining whether an agent has a positive duty to act, there are multiple considerations.
In California, Illinois and Pennsylvania in respect of a Power of Attorney for a person,[30] an agent is said in legislation to be relieved of a positive duty to act:
| California | §4230 states “(a) Except as provided in subdivisions (b) and (c), a person who is designated as an attorney-in-fact has no duty to exercise the authority granted in the power of attorney and is not subject to the other duties of an attorney-in-fact, regardless of whether the principal has become incapacitated, is missing, or is otherwise unable to act..(b) Acting for the principal in one or more transactions does not obligate an attorney-in-fact to act for the principal in a subsequent transaction, but the attorney-in-fact has a duty to complete a transaction that the attorney-in-fact has commenced.. (c) If an attorney-in-fact has expressly agreed in writing to act for the principal, the attorney-in-fact has a duty to act pursuant to the terms of the agreement. The agreement to act on behalf of the principal is enforceable against the attorney-in-fact as a fiduciary regardless of whether there is any consideration to support a contractual obligation.." The mandatory notice for durable Powers of Attorney in §4128 contains the words "Your agent (attorney-in-fact) has no duty to act unless you and your agent agree otherwise in writing.". §4266 provides "....the grant of authority to an attorney-in-fact, whether by the power of attorney, by statute, or by the court, does not in itself require or permit the exercise of the power. The exercise of authority by an attorney-in-fact is subject to the attorney-in-fact's fiduciary duties.." |
| Illinois | §2-7 states “..The agent shall be under no duty to exercise the powers granted by the agency or to assume control of or responsibility for any of the principal's property, care or affairs, regardless of the principal's physical or mental condition..” and in respcet respect of the government form, §3-4 states “..The agent will be under no duty to exercise granted powers or to assume control of or responsibility for the principal's property or affairs; but when granted powers are exercised, the agent will be required to act in good faith for the benefit of the principal using due care, competence, and diligence in accordance with the terms of the statutory property power and will be liable for negligent exercise..” |
| Pennsylvania | §5601(c) requires a notice to be attached to all Powers of Attorney that states “..This power of attorney does not impose a duty on your agent to exercise granted powers, but, when powers are exercised, your agent must use due care to act for your benefit and in accordance with this power of attorney...” |
Nonetheless, an agent may be required to do things in these states, for example produce accounts as referred to in the Case Study - Duty to Keep Accounts above.
Including provisions dealing with when an agent must act in any Power of Attorney are often useful and may be necessary in some of the Six (6) Greater States to achieve preferred outcomes of the principal.
Whether the principal is a person or a commercial entity is relevant when determining the existence of a positive duty to act upon agents appointed under a Power of Attorney.
A Special Word About California
The following extract from the 1994 California Law Revision Commission Report which led to enactment of Division 4.5 of the Probate Code is informative, speaking of law as it was prior to the amendments and proposed changes (footnotes are in brackets):
"The existing statutes are silent as to what obligation, if any, a person designated as an.. [agent] has to accept the position or what obligation there is to continue acting as.. [agent]. In the absence of an agreement, it appears under general agency principles that an.. [agent] is free to act or not to act, may refuse to act in future transactions after having acted in some matters, and can resign at will (See generally 2 B. Witkin, Summary of California Law Agency and Employment §§ 36-37, at 49-51, § 62, at 68 (9th ed. 1987). This is consistent with the idea that a Power of Attorney in a private relationship typically is an accommodation between friends or relatives. Many practitioners reportedly have the.. [agent] sign the power as a routine matter “to establish the.. [agent's] acceptance of the authority granted by the principal and the concurrent responsibilities as an agent.” (Montgomery & Wright, in Durable Powers of Attorney for Property Management, 1991 California Durable Power of Attorney Handbook § 2.46, at 55-56 (Cal. Cont. Ed. Bar)) The Uniform Statutory Form Power of Attorney provides that “by accepting or acting under the appointment, the agent assumes the fiduciary and other legal responsibilities of an agent.” (Civ. Code § 2475. The full implication of this statement is unknown. This language from the Uniform Statutory Form Power of Attorney Act was inadvertently stricken from the statute in the course of making a conforming revision in the form of the notary’s certification. See 1993 Cal. Stat. ch. 141, § 2 [AB 346]. This language is restored in the proposed law).
The situation is more formal with regard to trustees. Under the Trust Law, if a trustee accepts the trust, the trustee becomes subject to all applicable duties to administer the trust, cannot later refuse to act, and may resign only by following the procedures prescribed in the statute or the trust instrument. A trustee accepts by signing the trust instrument or knowingly exercising powers under the trust, except in emergency situations. (Prob. Code § 15600. Provision is also made for rejecting a trust or modification of a trust. See Prob. Code § 15601) Once the trustee has accepted the trust, the trustee has a duty to administer the trust, which does not end until the trustee is removed or allowed to resign. (See Prob. Code §§ 15640-15645 (resignation and removal), 16000 (duty to administer trust)).
The tendency of modern statutes is to relieve the.. [agent] from any duty to exercise the authority granted.(For example, the Illinois statute provides that the agent has no duty to exercise powers granted or to assume control of or responsibility for the principal’s property, care, or affairs, regardless of the principal’s physical or mental condition. Ill. Ann. Stat. ch. 110 ¶¶ 802-7 (Smith-Hurd Supp. 1990). See also Ind. Code Ann. § 30-5-6-1 (West Supp. 1993); Minn. Stat. Ann. § 529.21 (West 1991); Mo. Ann. Stat. § 404.705(4) (Vernon 1990)). The proposed law adopts this approach, making clear that no duty to exercise the authority conferred in the Power of Attorney arises merely from being designated as an.. [agent]. (This provision is drawn from the Missouri Durable Power of Attorney Law. See Mo. Ann. Stat. § 404.705(4) (Vernon 1990)). This rule applies whether or not the principal has become incapacitated, is missing, or is otherwise unable to act, unless the.. [agent] has agreed expressly in writing to act for the principal in certain circumstances. The.. [agent's] agreement is enforceable regardless of whether consideration is given. In addition, the proposed law provides, contrary to the trust rule, that acting for the principal in one or more transactions does not obligate the.. [agent] to act for the principal in later transactions, but the.. [agent] has a duty to complete a transaction that has been commenced.
These rules are intended to facilitate use of Powers of Attorney. (The following discussion draws on the Missouri Bar Association Comment to the new Missouri section. See Missouri Bar Ass’n, Missouri Probate and Trust Update — 1989, at 123-70). It is believed that in the usual case the principal wants someone to have the ability to act if something needs to be done, but rarely would expect to impose a duty to act on a family member or friend where the person chooses not to act. If a potential.. [agent] believes that there is a legal duty to act, he or she may be reluctant to accept the designation in the first instance. Under the proposed rule, the.. [agent] may also merely wait until the situation arises and then determine whether to act. The.. [agent] may refuse to act because of the personal inconvenience at the time of becoming involved, or for any other reason, and is not required to justify a decision not to act. The.. [agent] may believe that there are others in a better position to act for the principal or that the situation really warrants appointment of a court supervised guardian or conservator. However, once the.. [agent] undertakes to act under the Power of Attorney, the transaction is governed by the fiduciary duties imposed in the law. But even where the..[agent] has agreed in writing to act for the principal, the proposed law permits the attorney-in-fact to resign by giving notice to the principal (if the principal is competent), when a successor..[agent] agrees in writing to serve in place of the resigning.. [agent], or pursuant to a court order."
(As to §4230) "Section 4230 is drawn in part from the Missouri Durable Power of Attorney Law. See Mo. Ann. Stat. § 404.705(4) (Vernon 1990). Subdivision (a) makes clear that being named as an attorney-in-fact under a durable or nondurable power of attorney imposes no duty on the named person to act. This is true even if the attorney-in-fact knows of the designation and has received the power of attorney. A duty to act under this part arises only by reason of an express agreement in writing, as provided in subdivision (c). Reliance is not sufficient to impose a legal 186 POWER OF ATTORNEY LAW [Vol. 24 duty to act, as provided in subdivision (b). However, a particular transaction must be completed.
"This section recognizes that many powers of attorney are given and accepted as a gratuitous accommodation by the attorney-in-fact. The principal wants someone to have the ability to act if something needs to be done, but rarely would the principal expect to impose a duty to act on a friend or family member if the attorney-in-fact chooses not to do so. Consequently, unless the attorney-in-fact has agreed to act, accepting a power of attorney designation imposes no duty to act and the named person may even renounce the designation. The person named as attorney-in-fact may also merely wait until the situation arises and then determine whether to act. The person may refuse to act because of personal inconvenience at the time of becoming involved, or for any other reason, and is not required to justify a decision not to act. The person named as attorney-in-fact may believe that there are others in a better position to act for the principal or that the situation really warrants appointment of a court-supervised guardian or conservator. However, once the attorney-in-fact undertakes to act under the power of attorney, the transaction is governed by the duties imposed in the law to act as a fiduciary. See subdivision (c)."
¶ Where Principal Is A Commercial Entity Express Terms Dealing With Obligation To Act Are Recommended
Legislation in the Six (6) Greater States does not govern Powers of Attorney under which the principal is a commercial entity.
Accordingly, common law principles apply to Powers of Attorney under which the principal is a commercial entity that operate to deem an agent a fiduciary.
Wherever fiduciary duties exist, there may be argument as to whether the duty includes a positive duty to act.
The position is sufficiently uncertain as to warrant inclusion of express terms dealing with this issue in any Power of Attorney for a commercial entity.
¶ Where Principal Is A Person Laws Of The Six (6) Greater States Are Different
Powers of Attorney for persons[31] are substantially governed by legislation in five of the Six (6) Greater States.
The notable exception is Texas, where legislation only governs durable Powers of Attorney and non-durable Powers of Attorney are governed by common law.
In states where there may be a positive duty to act, it may be preferable to deal with this issue in clear terms in any event.
In states where legislation expressly excludes a positive duty to act such as California, Illinois or Pennsylvania, particular care may be warranted to include in a Power of Attorney precise terms about when an agent must act, if the principal expects the agent to act at any given time.
¶ Where A Fiduciary Duty Exists A Duty To Act May Exist
A fiduciary must do all things necessary within the scope of a fiduciary role to protect the principal's interest and therefore, it would not be unreasonable to suggest that a fiduciary relationship includes a positive duty to act.
As noted above, in California, Texas, New York and Florida, legislation expressly records that an agent under a Power of Attorney for a person[32] is a fiduciary.
In Illinois, the express recognition of an agent under a Power of Attorney for a person[33] as a fiduciary is not found in the legislation, although provisions deal with obligations to report and not conceal a breach of fiduciary duty by another agent: §2-10.3; §2-10.5, consistent with the existence of a fiduciary role.
In Pennsylvania, the legislation governing Powers of Attorney for a person[34] has been amended to delete provisions recording the existence of a fiduciary duty imposed agent under a Power of Attorney, albeit that does not of itself mean an agent is not a fiduciary.
In New York, §5-1505 governing Powers of Attorney for a person[35] states:
"In dealing with property of the principal, an agent shall observe the standard of care that would be observed by a prudent person dealing with property of another
2. Fiduciary duties. (a) An agent acting under a power of attorney has a fiduciary relationship with the principal. The fiduciary duties include but are not limited to each of the following obligations:
(1) To act according to any instructions from the principal or, where there are no instructions, in the best interest of the principal, and to avoid conflicts of interest."
In California where legislation governing Powers of Attorney for a person[36] relieves an agent of a positive duty to act (as noted below) and legislation also records that an agent under a Power of Attorney is a fiduciary there is an interesting tension.
If an agent under a Power of Attorney for a person[37] as a fiduciary has a positive duty to take steps to protect the interests of the principal, what is the effect of the express exclusion of this obligation?
Notably in California, legislation governing Powers of Attorney for a person[38] permits an agent under a Power of Attorney for a person[39] to act outside the scope of their written authority in emergencies, without reference to the existence of a positive duty to act in the event of an emergency.
¶ Can A Positive Duty To Act Be Included In A Power Of Attorney
In Texas, New York and Florida no provision expressly excludes the existence of a positive duty to act under a Power of Attorney for a person[40] and nothing prevents a principal including for example, directions dealing with the obligation of an agent to positively act.
In California, legislation imposes no positive duty to act, however §4230 recognizes a principal under a Power of Attorney for a person[41] may enter an agreement requiring an agent to positively act and "..the agreement to act on behalf of the principal is enforceable against the attorney-in-fact as a fiduciary regardless of whether there is any consideration to support a contractual obligation.."
In Illinois legislation expressly excludes the existence of a positive duty to act, however it seems clear a principal under a Power of Attorney for a person[42] may impose a positive duty to act upon an agent using suitable terms in a Power of Attorney (particularly given the expansive terms of §2-4).
In Pennsylvania, legislation expressly excludes the existence of a positive duty to act and a mandatory notice is required to be attached to any Power of Attorney for a person[43] (§5601(c)) that states “this power of attorney does not impose a duty on your agent to exercise granted powers” and the mandatory notice contains no provision to the effect that the position might be varied by other terms in the Power of Attorney
¶ In All Of The Six (6) Greater States There Are Certain Express Obligations
In all of the Six (6) Greater States, legislation imposes express obligations upon an agent under a Power of Attorney for a person:[44]
For example:-
- many of the Six (6) Greater States, expressly require an agent under a Power of Attorney for a person[45] to report a breach of fiduciary duty by a co-agent and in states where no express obligation is imposed in legislation, such a duty may exist in any event as part of an agent's overall fiduciary duty
- all of the Six (6) Greater States, require agents under a Power of Attorney for a person[46] to keep records or produce accounts
It may be questionable in some of the Six (6) Greater States whether obligations to act in accordance with the principal's expectations, or act with care and diligence, impose any positive obligation to act, particularly where for example, legislation expressly excludes the existence of a positive duty to act.
¶ Emergencies
An agent under a Power of Attorney for a person[47] may act outside the scope of their written authority in emergencies situations, such as in California, Illinois and New York.
In California and Illinois authority to act in an emergency remains expressly absent a positive duty to act.
§4202 in California states:-
“If an attorney-in-fact is unavailable because of absence, illness, or other temporary incapacity, the other attorneys-in-fact may exercise the authority under the Power of Attorney as if they are the only attorneys-in-fact, where necessary to accomplish the purposes of the Power of Attorney or to avoid irreparable injury to the principal's interests..”
§2-10.5 in Illinois states:
“..if prompt action is required to accomplish the purposes of the Power of Attorney or to avoid irreparable injury to the principal's interests and an agent is unavailable because of absence, illness, or other temporary incapacity, the other agent or agents may act for the principal.."
By contrast, in New York:-
- §5-1508 permits an agent to act outside the scope of their written authority where “prompt action is required to accomplish a purpose of the power of attorney and to avoid irreparable injury to the principal's interest and a co-agent is unavailable because of absence, illness or other temporary incapacity”
- legislation does not expressly exclude a positive duty to act, posing a question as to whether an agent appointed under a Power of Attorney might be obliged to act in an emergency
¶ An Agent Must Keep Information Confidential
Explain how can use to guard against disclosure of information, possibly better than a confidentiality agreement.
Injects a 'lot of words' for nothing etc.
¶ An Agent May Be Expected to Produce a Copy of the Power of Attorney
Explain §4306 in California doesn't actually require to produce copy:
(a) If an attorney-in-fact furnishes an affidavit pursuant to Section 4305 , whether voluntarily or on demand, a third person dealing with the attorney-in-fact who refuses to accept the exercise of the attorney-in-fact's authority referred to in the affidavit is liable for attorney's fees incurred in an action or proceeding necessary to confirm the attorney-in-fact's qualifications or authority, unless the court determines that the third person believed in good faith that the attorney-in-fact was not qualified or was attempting to exceed or improperly exercise the attorney-in-fact's authority.
§4306 and other relevant sections seem to assume it will be provided..
Look at reasonable grounds to reject a Power of Attorney §4306 entitles an agent who "believed in good faith that the attorney-in-fact was not qualified" to reject a Power of Attorney.
¶ Part 5: Entitlements & Liabilities
¶ Agent May Be Entitled To Indemnity By The Principal
EXPAIN INDEMNITY ENTITLEMENT, CONTRACTING OUT ETC.
¶ Agent May Be Entitled to Remuneration or Expenses
Five (5) of the Six (6) Greater States have legislation governing the entitlement of an agent appointed under a Power of Attorney created by a person[48] to remuneration or expenses, Illinois being the exception.
Provisions in legislation governing Powers of Attorney created by persons[49] that deal with remuneration or expenses payable to agents invariably operate subject to any contrary terms recorded in the Power of Attorney:-
| California, Florida & Pennsylvania | legislation governing Powers of Attorney created by persons[50] entitles an agent to remuneration and compensation (in Florida the right is limited to certain qualified agents) |
| Texas | legislation governing Powers of Attorney created by persons[51] entitles an agent to remuneration and compensation in respect of a durable Power of Attorney |
| New York | legislation governing Powers of Attorney created by persons[52] prescribes against any entitlement on the part of agents to remuneration |
| Illinois | legislation governing Powers of Attorney created by persons[53] does not address entitlement of agents to remuneration or expenses (meaning entitlement to remuneration or expenses remains a matter for common law and would best be dealt with expressly in a Power of Attorney) |
A principal may include terms in a Power of Attorney dealing with the entitlement of an agent to remuneration or expenses which override any of the following specific legislative provisions.
| California | An agent under a Power of Attorney created by a person[54] is entitled to reasonable compensation for services rendered to the principal as an agent and to reimbursement for reasonable expenses incurred as an agent: §4204. |
| Texas | An agent under a durable Power of Attorney created by a person[55] is entitled to reimbursement of reasonable expenses incurred on the principal's behalf and compensation that is reasonable under the circumstances: §751.024. In respect of a non-durable Power of Attorney, legislation does not exist to govern any entitlement of an agent to compensation or expenses and a prudent principal would presumably, specify their preferences in a Power of Attorney. |
| New York | An agent under a Power of Attorney created by a person[56] is not entitled to receive compensation from the assets of the principal for responsibilities performed under a Power of Attorney unless the principal specifically provides for compensation in the Power of Attorney and is entitled to receive reimbursement from the assets of the principal for reasonable expenses actually incurred in connection with the performance of the agent's responsibilities: §5-1506. "Compensation" means reasonable compensation authorized to be paid to the agent from assets of the principal for services actually rendered by the agent pursuant to the authority granted in a Power of Attorney: §5-1501. |
| Florida | An agent under a Power of Attorney created by a person[57] is entitled to reimbursement of expenses reasonably incurred on behalf of the principal a "qualified agent" is entitled to compensation that is reasonable under the circumstances and an agent may not be paid compensation unless the agent is a qualified agent: §709.2112. The term “qualified agent” means an agent who is the principal's spouse, an heir, a financial institution that has trust powers and a place of business in this state, an attorney or certified public accountant who is licensed in this state, or a natural person who is a resident of this state and who has never been an agent for more than three principals at the same time: §709.2112. |
| Illinois | Legislation governing Powers of Attorney created by a person[58] is silent on the issue of entitlement to remuneration or expenses, although the government form contains the following (§3-3): NOTE: Your agent will be entitled to reimbursement for all reasonable expenses incurred in acting under this power of attorney. ..Strike out paragraph 5 if you do not want your agent to also be entitled to reasonable compensation for services as agent... …5. My agent shall be entitled to reasonable compensation for services rendered as agent under this power of attorney.. |
| Pennsylvania | §5609 provides that an agent under a Power of Attorney created by a person[59] shall be entitled to reasonable compensation based upon the actual responsibilities assumed and performed and entitled to reimbursement for actual expenses advanced on behalf of the principal and to reasonable expenses incurred in connection with the performance of the agent's duties. |
More Insight About California
The following extract from the 1994 California Law Revision Commission Report which led to enactment of Division 4.5 of the Probate Code is informative, speaking of law as it was prior to the amendments and proposed changes (footnotes are in brackets):
"Existing statutes provide no rules on compensation of.. [agents], except to say that consideration is not necessary to make an.. [agent’s] authority binding on the principal.52 An.. [agent] is generally not expected to receive compensation, since the.. [agent] is usually a friend or member of the principal’s family who accepts the designation as an accommodation. (See Montgomery & Wright, Durable Powers of Attorney for Property Management, in 1991 California Durable Power of Attorney Handbook § 2.51, at 58 (Cal. Cont. Ed. Bar); Missouri Bar Ass’n Comment to Mo. Ann. Stat. § 404.725 (Vernon 1990), Missouri Bar Ass’n, Missouri Probate and Trust Update — 1989, at 156). The proposed law provides that the.. [agent] is entitled to reasonable compensation and to reimbursement of expenses. (This provision is drawn from the Missouri Durable Power of Attorney Law. See Mo. Ann. Stat. § 404.725 (Vernon 1990)). This authority is comparable to the law applicable to compensation and reimbursement of trustees (See Prob. Code §§ 15681, 15684(a)) and custodians under the Uniform Transfers to Minors Act. (See Prob. Code § 3915). The default right to compensation and reimbursement is subject to control in the Power of Attorney. It is believed that most.. [agents] will serve without expecting compensation, but if the principal becomes incompetent and the.. [agent] is expected to incur substantial expenditures of time and money, compensation is entirely appropriate. In fact, omitting a right to compensation might result in the failure of a durable Power of Attorney to carry out its purpose, since the.. [agent] may be unwilling to continue without compensation and reimbursement. 52. Civ. Code § 2308. The statutory form power of attorney provides authority for the agent to reimburse expenditures properly made. Civ. Code § 2485(i)."
(As to §4204) "Section 4204 is drawn from the Missouri Durable Power of Attorney Law. See Mo. Ann. Stat. § 404.725 (Vernon 1990). This section is comparable to Sections 15681 (trustee’s compensation) and 15684(a) (reimbursement for trustee’s expenses). In many situations, a relative acting as an.. [agent] under a durable Power of Attorney expects to act for the principal as an accommodation. Normally, while the principal is not disabled, such service will be infrequent and will not involve substantial time. However, with the prospect that if the principal becomes disabled or incapacitated, substantial time, effort, and expense may be required of the.. [agent] and any successor attorneys-in-fact extending over a long period of time, compensation may be important. A definite understanding regarding compensation may be included in the Power of Attorney or in a separate agreement. Reimbursement of expenses would be expected to include the cost of bookkeeping, tax, and legal services incurred by the.. [agent] in performing duties on the principal’s behalf. It would also include the cost of preparing an accounting and any travel or personal expense incurred by the.. [agent]. This section is subject to limitation in the Power of Attorney. See Section 4101 (priority of provisions of Power of Attorney). See Section 4231(b) (effect of compensation on standard of care)."
¶ Checks & Balances Preventing An Agent Abusing A Power Of Attorney Are Ripe For Inclusion
There is advantage in considering a wide variety of measures that might assist to reduce risk of an agent abusing a Power of Attorney.
There is no substitute for the clearest possible terms around the issue of entitlement of an agent to remuneration or expenses.
In a better Power of Attorney, a principal might delegate the task of paying monies due to an agent to another agent, ensuring that no agent has authority to pay themselves, so to speak.
¶ Agent In California & New York Is Entitled To Certain Information Under Statute
In California, §4235 operates in respect of a Power of Attorney created by a person,[60] which has no direct legislative equivalent in any of the other five (5) of the Six (6) Greater States:
If the principal becomes wholly or partially incapacitated, or if there is a question concerning the capacity of the principal to give instructions to and supervise the attorney-in-fact, the attorney-in-fact may consult with a person previously designated by the principal for this purpose, and may also consult with and obtain information needed to carry out the attorney-in-fact's duties from the principal's spouse, physician, attorney, accountant, a member of the principal's family, or other person, business entity, or government agency with respect to matters to be undertaken on the principal's behalf and affecting the principal's personal affairs, welfare, family, property, and business interests. A person from whom information is requested shall disclose relevant information to the attorney-in-fact. Disclosure under this section is not a waiver of any privilege that may apply to the information disclosed. (§4235)
In New York, an agent has power under §5-1508 "to request, receive and seek to compel a co-agent or predecessor agent to provide a record of all receipts, disbursements and transactions entered into by the agent on behalf of the principal."
¶ Damages Might Work Differently Under A Power of Attorney As Compared To A Mere Contract
A Power of Attorney tends to render an agent more responsible than might be the case under other arrangements.
To illustrate how a Power of Attorney tends to render an agent more responsible than might be the case under other arrangements, it is convenient to compare outcomes where:
- an agent appointed under a Power of Attorney fails to discharge their fiduciary duty
- a legal entity enters a contract with another legal entity to paint a house, build a boat or clean a certain property on a weekly basis and fails to paint, build or clean
By comparison:-
- an agent appointed under a Power of Attorney might be ordered to bear any losses suffered by the principal as a result of them failing to perform properly as an agent and for example, if the agent has benefitted from their improper performance of those tasks, account to the principal for any benefit they acquired
- the legal entity that fails to paint, build or clean likely might be ordered to pay damages equivalent to the amount required to have the painting, building or cleaning performed
As the examples above illustrate, an agent under a Power of Attorney is potentially capable of acquiring greater liabilities than a 'mere contractor', because:-
- their liabilities may go beyond the cost of putting the principal in the same place they would have been had a contract been fulfilled
- their liabilities might include for example, any and all losses occasioned as a result of the agent failing to properly perform their duties, accounting for profit derived by the agent etc.
¶ An Agent's Liabilities May Be Partly Regulated By Legislation
Only Illinois has legislation governing Powers of Attorney created by a person[61] that includes a wide, express right to regulate liabilities of an agent of the kind seen in §2-4 which states:
The principal may specify in the agency the event or time when the agency will begin and terminate, the mode of revocation or amendment and the rights, powers, duties, limitations, immunities and other terms applicable to the agent.
¶ Acts of Other Agents
In California an agent under a Power of Attorney created by a person[62] is not liable for the actions of another agent, unless the agent participates in, knowingly acquiesces in, or conceals a breach of fiduciary duty committed by another agent: §4202.
An agent under a Power of Attorney created by a person[63] may be subject to liability for conduct or omissions which violate any fiduciary duty: §5-1505.
In Florida in respect of a Power of Attorney created by a person[64]:-
- an agent who does not participate in or conceal a breach of fiduciary duty committed by another agent, including a predecessor agent, is not liable for the actions or omissions of the other agent: §709.2111
- an agent who has actual knowledge of a breach or imminent breach of fiduciary duty by another agent, including a predecessor agent, must take any action reasonably appropriate in the circumstances to safeguard the principal's best interests. If the agent in good faith believes that the principal is not incapacitated, giving notice to the principal is a sufficient action. An agent who fails to take action as required by this subsection is liable to the principal for the principal's reasonably foreseeable damages that could have been avoided if the agent had taken such action: §709.2111
- a successor agent does not have a duty to review the conduct or decisions of a predecessor agent (or claim against a predecessor agent): §709.2111
- an agent who acts in good faith is not liable to any beneficiary of the principal's estate plan for failure to preserve the plan: §709.2114
- absent a breach of duty to the principal, an agent is not liable if the value of the principal's property declines: §709.2114
In Illinois, an agent under a Power of Attorney created by a person[65] is not liable for the actions of another agent, including a predecessor agent, unless the agent participates in or conceals a breach of fiduciary duty committed by the other agent. An agent who has knowledge of a breach or imminent breach of fiduciary duty by another agent must notify the principal and, if the principal is incapacitated, take whatever actions may be reasonably appropriate in the circumstances to safeguard the principal's best interest: §2-10.3
¶ Third Party Liabilities
An agent under a Power of Attorney created by a person[66] is not liable to third parties for any act pursuant to a Power of Attorney if the act was authorized at the time and the act did not violate certain subdivisions dealing with concealment of a breach of fiduciary duty and similar: §5-1505
¶ Damages & Remedies
In California in respect of a Power of Attorney created by a person[67] potential damages claimable against an agent include loss or depreciation in value of the principal's property resulting from the breach of duty, any profit made by the agent through the breach of duty, any profit that would have accrued to the principal but for the breach and interest on these amounts. Also, special provisions deal with liabilities in respect of senior citizens: §4231.5
In Florida, an agent under a Power of Attorney created by a person[68] is liable to restore the value of the principal's property to what it would have been had the violation not occurred and reimburse the principal or the principal's successors in interest for the attorney's fees and costs paid from the principal's funds on the agent's behalf in defense of the agent's actions: §709.2117
In Illinois, an agent under a Power of Attorney created by a person[69] may be liable for the amount required (i) to restore the value of the principal's property to what it would have been had the violation not occurred, and (ii) to reimburse the principal or the principal's successors in interest for the attorney's fees and costs paid on the agent's behalf: §2-7
In respect of a Power of Attorney created by a person[69:1] remedies may be cumulative.
¶ Defences
In California, an agent under a Power of Attorney created by a person[70] acting reasonably and in good faith under the circumstances as known to the agent may be relieved whole or in part from liability by a Court if it would be equitable to do so (see §4231.5).
In Florida under a Power of Attorney created by a person[71] (see §709.2111):-
- an agent who acts in good faith is not liable to any beneficiary of the principal's estate plan for failure to preserve the plan:§709.2114
- absent a breach of duty to the principal, an agent is not liable if the value of the principal's property declines: §709.2114
In Illinois under a Power of Attorney created by a person,[72] an agent who acts with due care for the benefit of the principal shall not be liable or limited merely because the agent also benefits from the act, has individual or conflicting interests in relation to the property, care or affairs of the principal or acts in a different manner with respect to the agency and the agent's individual interests. The agent shall not be affected by any amendment or termination of the agency until the agent has actual knowledge thereof. The agent shall not be liable for any loss due to error of judgment nor for the act or default of any other person (see §2-7):
“An agent who acts with due care for the benefit of the principal shall not be liable or limited merely because the agent also benefits from the act, has individual or conflicting interests in relation to the property, care or affairs of the principal or acts in a different manner with respect to the agency and the agent's individual interests. The agent shall not be affected by any amendment or termination of the agency until the agent has actual knowledge thereof. The agent shall not be liable for any loss due to error of judgment nor for the act or default of any other person:" §2-7
In Pennsylvania under a Power of Attorney created by a person[73] (see §5601.3(c)):-
- an agent that acts in good faith shall not be liable to a beneficiary of the principal's estate plan for failure to preserve the plan
- an agent that acts with care, competence and diligence for the best interest of the principal shall not be liable solely because the agent also benefits from the act or has an individual or conflicting interest in relation to the property or affairs of the principal
- if an agent is selected by the principal because of special skills or expertise possessed by the agent or in reliance on the agent's representation that the agent has special skills or expertise, the special skills or expertise must be considered in determining whether the agent has acted with care, competence and diligence under the circumstances
- absent a breach of duty to the principal, an agent shall not be liable if the value of the principal's property declines
¶ Agent's Obligations
¶ Duties of An Agent
Under the heading Legislation Sets Out Various Duties Owed By An Agent is a list of legislative duties owed by agents found in the legislation of the Six (6) Greater States and related insight.
The listed duties seem likely to be owed by an agent, whether or not they are ‘omitted’ from the legislation of a particular state, presumably forming part of the common law.
¶ Agent's Liabilities
¶ Good Faith Defenses
Many states relieve an agent of liability where they act in good faith or similar.
For example:-
- in California, §4231.5(c) entitles a Court to relieve an agent of liability where they have acted in good faith[5:1]
- in Pennsylvania §5601.3(c) exculpates an agent from liability where they act in good faith
- in Florida, §709.2115 recognizes that a principal might record terms in the Power of Attorney exculpating an agent from liability where they act in good faith, subject to a limitation that any such provisions cannot "relieve the agent of liability for breach of a duty committed dishonestly, with improper motive, or with reckless indifference to the purposes of the power of attorney or the best interest of the principal"
Some of these provisions are tempered by recognition of higher standards of care being expected of persons with special skills or expertise.[6:1]
¶ Damages
But for perhaps any good faith defence, breach of a duty might for example, render an agent liable for damages.
Notably:-
- in California, the right of a principal to recoup profits derived by an agent from actions contrary to their duty is expressly recognized: §4231.5
- damages and rights under legislation are typically cumulative (i.e. supplemented by common law)[74]
¶ Remedies
Remedies may flow from use of a Power of Attorney that would not flow in respect of a common agency agreement.
For example, in New York per §1505(3) and in Florida per §709.2114(6) a principal may demand an account from an agent and penalties apply if an agent fails to provide accounts.
¶ SOME HANDY REFERENCES
¶ California
¶ Terminology
The term “attorney-in-fact"” is defined to include a “person” granted authority to act for the principal (see §4014).
In California, the term ‘attorney-in-fact’ is used in the legislation, as opposed to the term 'agent'.[75]
¶ Entity Types
The term “person” is defined as an ”individual, corporation, government or governmental subdivision or agency, business trust, estate, trust, partnership, limited liability company, association, or other entity." (see §56)
Only a person having the capacity to contract is qualified to act as an attorney-in-fact: §4200.[76]
¶ Positive Duty To Act
§4266 recognizes that “The exercise of authority by an attorney-in-fact is subject to the attorney-in-fact’s fiduciary duties.”
References to the existence of fiduciary duties also arise in other contexts in the legislation:-
- §4202 imposes a duty not to conceal breach of fiduciary duties committed by another agent
- §4230 deals with the absence of a positive duty to act in terms recognizing the existence of a fiduciary duty
§4128 in California contains a mandatory notice requires a notice to be included in any Power of Attorney not sold for use by a person who does not have the advice of legal counsel to contain the following:-
"Notice to Person Accepting the Appointment as Attorney-in-Fact
By acting or agreeing to act as the agent (attorney-in-fact) under this power of attorney you assume the fiduciary and other legal responsibilities of an agent.."
There seems little reason not simply to require the inclusion of this notice in any Power of Attorney and such a notation might be included in all Powers of Attorney, albeit it would preferably also recognize the right of the principal to specify otherwise in a Power of Attorney.
¶ Exclusion of Positive Duty to Act
§4230 states:-
“If an attorney-in-fact has expressly agreed in writing to act for the principal, the attorney-in-fact has a duty to act pursuant to the terms of the agreement. The agreement to act on behalf of the principal is enforceable against the attorney-in-fact as a fiduciary regardless of whether there is any consideration to support a contractual obligation”
The mandatory notice in §4128 contains the words:
"Your agent (attorney-in-fact) has no duty to act unless you and your agent agree otherwise in writing."
¶ Agent's Duties Generally
§4266 recognizes that “The exercise of authority by an attorney-in-fact is subject to the attorney-in-fact’s fiduciary duties.”
References to the existence of fiduciary duties also arise in other contexts in the legislation:-
- §4202 imposes a duty not to conceal breach of fiduciary duties committed by another agent
- §4230 deals with the absence of a positive duty to act in terms recognizing the existence of a fiduciary duty
§4128 in California contains a mandatory notice requires a notice to be included in any Power of Attorney not sold for use by a person who does not have the advice of legal counsel to contain the following:-
Notice to Person Accepting the Appointment as Attorney-in-Fact
By acting or agreeing to act as the agent (attorney-in-fact) under this power of attorney you assume the fiduciary and other legal responsibilities of an agent..
An attorney-in-fact with special skills has a duty to apply the full extent of those skills.
§4238 states:
(a) On termination of an attorney-in-fact's authority, the attorney-in-fact shall promptly deliver possession or control of the principal's property as follows:
(1) If the principal is not incapacitated, to the principal or as directed by the principal.
(2) If the principal is incapacitated, to the following persons with the following priority:
(A) To a qualified successor attorney-in-fact.
(B) As to any community property, to the principal's spouse.
(C) To the principal's conservator of the estate or guardian of the estate.
(3) In the case of the death of the principal, to the principal's personal representative, if any, or the principal's successors.
(b) On termination of an attorney-in-fact's authority, the attorney-in-fact shall deliver copies of any records relating to transactions undertaken on the principal's behalf that are requested by the person to whom possession or control of the property is delivered.
(c) Termination of an attorney-in-fact's authority does not relieve the attorney-in-fact of any duty to render an account of actions taken as attorney-in-fact.
(d) The attorney-in-fact has the powers reasonably necessary under the circumstances to perform the duties provided by this section.
§4230 states:
(a) Except as provided in subdivisions (b) and (c), a person who is designated as an attorney-in-fact has no duty to exercise the authority granted in the power of attorney and is not subject to the other duties of an attorney-in-fact, regardless of whether the principal has become incapacitated, is missing, or is otherwise unable to act.
(b) Acting for the principal in one or more transactions does not obligate an attorney-in-fact to act for the principal in a subsequent transaction, but the attorney-in-fact has a duty to complete a transaction that the attorney-in-fact has commenced.
(c) If an attorney-in-fact has expressly agreed in writing to act for the principal, the attorney-in-fact has a duty to act pursuant to the terms of the agreement. The agreement to act on behalf of the principal is enforceable against the attorney-in-fact as a fiduciary regardless of whether there is any consideration to support a contractual obligation.
§4231 states:
(a) Except as provided in subdivision (b), in dealing with property of the principal, an attorney-in-fact shall observe the standard of care that would be observed by a prudent person dealing with property of another and is not limited by any other statute restricting investments by fiduciaries.
(b) An attorney-in-fact who has special skills or expertise or was designated as an attorney-in-fact on the basis of representations of special skills or expertise shall observe the standard of care that would be observed by others with similar skills or expertise.
§4232 states:
(a) An attorney-in-fact has a duty to act solely in the interest of the principal and to avoid conflicts of interest.
(b) An attorney-in-fact is not in violation of the duty provided in subdivision (a) solely because the attorney-in-fact also benefits from acting for the principal, has conflicting interests in relation to the property, care, or affairs of the principal, or acts in an inconsistent manner regarding the respective interests of the principal and the attorney-in-fact.
§4233 states:
(a) The attorney-in-fact shall keep the principal's property separate and distinct from other property in a manner adequate to identify the property clearly as belonging to the principal.
(b) An attorney-in-fact holding property for a principal complies with subdivision (a) if the property is held in the name of the principal or in the name of the attorney-in-fact as attorney-in-fact for the principal.
§4234 states:
(a) To the extent reasonably practicable under the circumstances, an attorney-in-fact has a duty to keep in regular contact with the principal, to communicate with the principal, and to follow the instructions of the principal.
(b) With court approval, the attorney-in-fact may disobey instructions of the principal.
§4235 states:
If the principal becomes wholly or partially incapacitated, or if there is a question concerning the capacity of the principal to give instructions to and supervise the attorney-in-fact, the attorney-in-fact may consult with a person previously designated by the principal for this purpose, and may also consult with and obtain information needed to carry out the attorney-in-fact's duties from the principal's spouse, physician, attorney, accountant, a member of the principal's family, or other person, business entity, or government agency with respect to matters to be undertaken on the principal's behalf and affecting the principal's personal affairs, welfare, family, property, and business interests. A person from whom information is requested shall disclose relevant information to the attorney-in-fact. Disclosure under this section is not a waiver of any privilege that may apply to the information disclosed.
§4236 states:
(a) The attorney-in-fact shall keep records of all transactions entered into by the attorney-in-fact on behalf of the principal.
(b) The attorney-in-fact does not have a duty to make an account of transactions entered into on behalf of the principal, except in the following circumstances:
(1) At any time requested by the principal.
(2) Where the power of attorney requires the attorney-in-fact to account and specifies to whom the account is to be made.
(3) On request by the conservator of the estate of the principal while the principal is living.
(4) On request by the principal's personal representative or successor in interest after the death of the principal.
(5) Pursuant to court order.
(c) The following persons are entitled to examine and copy the records kept by the attorney-in-fact:
(1) The principal.
(2) The conservator of the estate of the principal while the principal is living.
(3) The principal's personal representative or successor in interest after the death of the principal.
(4) Any other person, pursuant to court order.
(d) This section is not subject to limitation in the power of attorney.
¶ Compensation & Expenses
§4204 states:
An attorney-in-fact is entitled to reasonable compensation for services rendered to the principal as attorney-in-fact and to reimbursement for reasonable expenses incurred as a result of acting as attorney-in-fact.
¶ Liability, Remedies & Damages
§4201 states:
"..designating an unqualified person as an attorney-in-fact does not affect the immunities of third persons nor relieve the unqualified person of any applicable duties to the principal or the principal's successors.."
§4202 states:
..(e) An attorney-in-fact is not liable for the actions of other attorneys-in-fact, unless the attorney-in-fact participates in, knowingly acquiesces in, or conceals a breach of fiduciary duty committed by another attorney-in-fact.
§4231 states:
a) If the attorney-in-fact breaches a duty pursuant to this division, the attorney-in-fact is chargeable with any of the following, as appropriate under the circumstances:
(1) Any loss or depreciation in value of the principal's property resulting from the breach of duty, with interest.
(2) Any profit made by the attorney-in-fact through the breach of duty, with interest.
(3) Any profit that would have accrued to the principal if the loss of profit is the result of the breach of duty.
(b) If the attorney-in-fact has acted reasonably and in good faith under the circumstances as known to the attorney-in-fact, the court, in its discretion, may excuse the attorney-in-fact in whole or in part from liability under subdivision (a) if it would be equitable to do so.
(c) If a court finds that a person has in bad faith wrongfully taken, concealed, or disposed of property that belongs to a principal under a power of attorney, or has taken, concealed, or disposed of property that belongs to a principal under a power of attorney by the use of undue influence in bad faith or through the commission of elder or dependent adult financial abuse, as defined in §15610.30 of the Welfare and Institutions Code, the person shall be liable for twice the value of the property recovered by an action to recover the property or for surcharge. In addition, except as otherwise required by law, including §15657.5 of the Welfare and Institutions Code , the person may, in the court's discretion, be liable for reasonable attorney's fees and costs to the prevailing party. The remedies provided in this section shall be in addition to any other remedies available in law to the principal or any successor in interest of the principal.
¶ Texas
¶ Non-Durable Power of Attorney
¶ Terminology
Noting the term "agent" is used in the context of durable Powers of Attorney, it seems appropriate.
¶ Entity Types
In Texas, it has been judicially recognized that a Power of Attorney may be used in business transactions: Texas Bankers Association v Association of Community Organizations for Reform Now (ACORN) (App 3 Dist. 2010) 303 S.W.3d 404.
The Courts of Texas have also considered cases in which for example: a a limited liability corporation was appointed as an agent (Transcontinental Realty Investors, Inc v Orix Capital Markets LLC and Wells Fargo Bank, No 05-14-00588-CV, Tex. App. – Dallas, August 5, 2015 and Plasma Fab, LLC v Bankdirect Capital Finance, LLC, No 03-13-00331-CV, Tex. App. – Austin, July 8, 2015); or a partnership (Andre McCoy v Fempartners Inc et al, No 14-14-00754-CV, Tex. App. – Houston, December 22, 2015).
¶ Durable Power of Attorney
¶ Terminology
The term "agent" is preferred in Texas.
¶ Entity Types
§751.0021 states:
"An instrument is a durable power of attorney for purposes of this subtitle if the instrument:
(1) is a writing or other record that designates another person as agent and grants authority to that agent to act in the place of the principal, regardless of whether the term “power of attorney” is used.."
§751.002 states:
(3) “Agent” includes:
(A) an attorney in fact; and
(B) a co-agent, successor agent, or successor co-agent.
Unlike the remainder of the Six (6) Greater States where legislation governs durable and non-durable Power of Attorney speaks of a "person" being appointed and in turn, has legislation apparently defining the term "person" to include expressly recognizes the right to appoint a corporate-style agents, there is no similar legislation in Texas
On one view, §751.0021(a)(1) provides that a durable Power of Attorney designates “another person as an agent” and §22.027 provides that “person” includes a natural person and a corporation” and accordingly, a corporation may be appointed as an agent under a durable Power of Attorney (addressed further below).
On another view, notwithstanding that §22.027 refers to a corporation, an agent may only be a person, given that the word “another” person in §751.0021(a)(1) imports a requirement that any agent be a “person” in the sense of being a person, if it be accepted that the word “another” imports a requirement that the agent be a legal entity of the same type as the principal and given: (a) the term “principal” is defined in §751.002(5) to mean “an adult person who signs or directs the signing of the person’s name on a Power of Attorney that designates an agent to act on the person’s behalf”; (b) the words “adult person” in §751.002(5) could only refer to a natural person; (c) only a person may sign their name on a Power of Attorney as referred to in §751.002(5); (d) by its nature, a durable Power of Attorney operates or may operate, during a period of time the principal is “determined to be mentally incapable of managing the person’s financial affairs” based on a physician’s examination of the person (§751.00201) and hence, a principal might only be a person, given only a person might be “mentally incapable” or examined by a physician
On the question of whether the definition of “person” includes a corporation so as to include a corporation: (a) it might be said that: (i) the term “person” in the context of determining who constitutes “another person” is to be read broadly in accordance with the definition in §22.027 such that a person being a person or a corporation may constitute “another person”; and (ii) notwithstanding that for the reasons cited in the previous bullet point it may be that the principal appointing “another person” must be a person, the word “another” should not be read as to require more than that the person so appointed is also a “person” as defined in §22.027; (iii) hence even if the principal who is appointing “another person” must be a person it does not follow that the person being appointed must also be a person; and (b) if the appointment of a corporation is permitted, views may differ between lawyers as to whether such a corporation must be authorized to act as a fiduciary as contemplated by §112.008.
This 2014 article published in Texas (before the substantial 2018 reforms) A Guide to Fiduciary Selection published in Estate Planning Developments for Texas Professionals (2014) suggests a corporation with authority under §304.003(4) may be appointed.
Views may differ for example. as to whether a person may be appointed as an agent in the capacity of trustee of a trust.
¶ Positive Duty To Act
¶ Existence Of Fiduciary Duty
§751.101 states:
“A person who accepts appointment as an agent under a durable power of attorney as provided by §751.122 is a fiduciary as to the principal only when acting as an agent under the power of attorney and has a duty to inform and to account for actions taken under the power of attorney.”
§751.121 imposes a duty not to conceal breach of fiduciary duties committed by another agent.
¶ Exclusion of Positive Duty to Act
Texas legislation contains no express provision with respect to the existence or non-existence of a positive duty to act.
¶ Agent's Duties Generally
¶ Non-durable Power of Attorney
Unlike the remainder of the Six (6) Greater States, Texas does not have legislation governing non-durable Powers of Attorney.
¶ Durable Power of Attorney
§751.101 states:
A person who accepts appointment as an agent under a durable power of attorney as provided by §751.122 is a fiduciary as to the principal only when acting as an agent under the power of attorney and has a duty to inform and to account for actions taken under the power of attorney..
§751.121 imposes a duty not to conceal breach of fiduciary duties committed by another agent.
§751.103 states:
(a) The agent shall maintain records of each action taken or decision made by the agent.
(b) The agent shall maintain all records until delivered to the principal, released by the principal, or discharged by a court.
§751.104 states:
(a) The principal may demand an accounting by the agent.
(b) Unless otherwise directed by the principal, an accounting under Subsection (a) must include:
(1) the property belonging to the principal that has come to the agent's knowledge or into the agent's possession;
(2) each action taken or decision made by the agent;
(3) a complete account of receipts, disbursements, and other actions of the agent that includes the source and nature of each receipt, disbursement, or action, with receipts of principal and income shown separately;
(4) a listing of all property over which the agent has exercised control that includes:
(A) an adequate description of each asset; and
(B) the asset's current value, if the value is known to the agent;
(5) the cash balance on hand and the name and location of the depository at which the cash balance is kept;
(6) each known liability; and
(7) any other information and facts known to the agent as necessary for a full and definite understanding of the exact condition of the property belonging to the principal.
(c) Unless directed otherwise by the principal, the agent shall also provide to the principal all documentation regarding the principal's property.
§751.105 states:
If the agent fails or refuses to inform the principal, provide documentation, or deliver an accounting under §751.104 within 60 days of a demand under that section, or a longer or shorter period as demanded by the principal or ordered by a court, the principal may file suit to:
(1) compel the agent to deliver the accounting or the assets; or
(2) terminate the durable power of attorney.
§751.122 states:
An agent shall preserve to the extent reasonably possible the principal's estate plan to the extent the agent has actual knowledge of the plan if preserving the plan is consistent with the principal's best interest based on all relevant factors, including:
(1) the value and nature of the principal's property;
(2) the principal's foreseeable obligations and need for maintenance;
(3) minimization of taxes, including income, estate, inheritance, generation-skipping transfer, and gift taxes; and
(4) eligibility for a benefit, a program, or assistance under a statute or regulation.
§752.051 states (as part of the government form):
In addition, the Durable Power of Attorney Act (Subtitle P, Title 2, Estates Code) requires you to:
(1) maintain records of each action taken or decision made on behalf of the principal;
(2) maintain all records until delivered to the principal, released by the principal, or discharged by a court; and
(3) if requested by the principal, provide an accounting to the principal that, unless otherwise directed by the principal or otherwise provided in the Special Instructions, must include:
(A) the property belonging to the principal that has come to your knowledge or into your possession;
(B) each action taken or decision made by you as agent;
(C) a complete account of receipts, disbursements, and other actions of you as agent that includes the source and nature of each receipt, disbursement, or action, with receipts of principal and income shown separately;
(D) a listing of all property over which you have exercised control that includes an adequate description of each asset and the asset's current value, if known to you;
(E) the cash balance on hand and the name and location of the depository at which the cash balance is kept;
(F) each known liability;
(G) any other information and facts known to you as necessary for a full and definite understanding of the exact condition of the property belonging to the principal; and
(H) all documentation regarding the principal's property.
¶ Compensation & Expenses
§751.024 states:
Unless the durable power of attorney otherwise provides, an agent is entitled to:
(1) reimbursement of reasonable expenses incurred on the principal's behalf; and
(2) compensation that is reasonable under the circumstances.
¶ Liability, Remedies & Damages
§751.006 states:
The remedies under this chapter are not exclusive and do not abrogate any right or remedy under any law of this state other than this chapter.
¶ New York
¶ Terminology
The term "original agent" is preferred in New York.
¶ Entity Types
a person granted authority to act as attorney-in-fact for the principal under a power of attorney, and includes the original agent and any co-agent or successor agent
§1501 defines a person as:
.. an individual, whether acting for himself or herself, or as a fiduciary or as an official of any legal, governmental or commercial entity (including, but not limited to, any such entity identified in this subdivision), corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, government, governmental subdivision, government agency, government entity, government instrumentality, public corporation, or any other legal or commercial entity
§5-1508 states:
Any person, other than an estate or a trust, may act as an agent, co-agent or successor agent under a power of attorney
¶ Positive Duty To Act
¶ Existence Of Fiduciary Duty
§5-1501 states within the definition of the term ‘agent’:-
"An agent acting under a power of attorney has a fiduciary relationship with the principal"
¶ Exclusion of Positive Duty to Act
In New York, no legislative provision expressly excludes the existence of a positive duty to act.
In New York, §5-1510 recognizes that a special proceeding may be commenced .. “to remove the agent upon the grounds that the agent has violated, or is unfit, unable, or unwilling to perform, the fiduciary duties under the power of attorney..” in the context of which the word “unwilling” might be said to be suggestive of a positive duty to act.
Contrary to this suggestion, other positive indicia exist for example, amendments to the legislation of New York effective June 13, 2021 delete the use of a ‘statutory gifts rider’ in respect of which mention was previously made with respect to an absence of a duty to act in this provision, which ceased to be effective on June 13, 2021, which is suggestive of absence of a positive duty to act (bold added):-
"CAUTION TO THE PRINCIPAL: This OPTIONAL rider allows you to authorize your agent to make gifts.. This Gifts Rider does not require your agent to exercise granted authority, but when he or she exercises this authority, he or she must act according to any instructions you provide, or otherwise in your best interest."
Whatever be the position, there are certain express duties imposed upon an agent requiring them to act, such as:-
- §709.2114(1)(a)(4) imposes an obligation upon an agent to preserve a principal's estate plan, although if this falls outside the tasks an agent is authorized to perform this would have no operation
- §709.2114 imposes obligations upon an agent with respect to keeping records and accounting, act with care, competence and diligence, cooperate with persons with health care responsibilities and to produce records on demand to certain classes of persons (including the principal, any guardian, other fiduciary acting for the principal, welfare agencies etc.)
¶ Agent's Duties Generally
§5-1501 states within the definition of the term ‘agent’:-
"An agent acting under a power of attorney has a fiduciary relationship with the principal"
§5-1505 states:
In dealing with property of the principal, an agent shall observe the standard of care that would be observed by a prudent person dealing with property of another
2. Fiduciary duties. (a) An agent acting under a power of attorney has a fiduciary relationship with the principal. The fiduciary duties include but are not limited to each of the following obligations:
(1) To act according to any instructions from the principal or, where there are no instructions, in the best interest of the principal, and to avoid conflicts of interest.
(2) To keep the principal's property separate and distinct from any other property owned or controlled by the agent, except for property that is jointly owned by the principal and agent at the time of the execution of the power of attorney, and property that becomes jointly owned after the execution of the power of attorney as the result of the agent's acquisition of an interest in the principal's property by reason of the agent's exercise of authority granted in the modifications section of a statutory short form power of attorney or in a non-statutory power of attorney. The agent may not make gifts of the principal's property to himself or herself without specific authorization in a power of attorney.
(3) To keep a record of all receipts, disbursements, and transactions entered into by the agent on behalf of the principal and to make such record and power of attorney available to the principal or to third parties at the request of the principal. The agent shall make such record and a copy of the power of attorney available within fifteen days of a written request by any of the following:
(i) a monitor;
(ii) a co-agent or successor agent acting under the power of attorney;
(iii) a government entity, or official thereof, investigating a report that the principal may be in need of protective or other services, or investigating a report of abuse or neglect;
(iv) a court evaluator appointed pursuant to section 81.09 of the mental hygiene law;
(v) a guardian ad litem appointed pursuant to section seventeen hundred fifty-four of the surrogate's court procedure act;
(vi) the guardian or conservator of the estate of the principal, if such record has not already been provided to the court evaluator or guardian ad litem; or
(vii) the personal representative of the estate of a deceased principal if such record has not already been provided to the guardian or conservator of the estate of the principal.
The failure of the agent to make the record available pursuant to this paragraph may result in a special proceeding under subdivision one of §5-1510 of this title.
1. If the agent has failed to make available a copy of the power of attorney and/or a record of all receipts, disbursements, and transactions entered into by the agent on behalf of a principal to a person who may request such record pursuant to subparagraph three of paragraph (a) of subdivision two of §5-1505 of this title, that person may commence a special proceeding to compel the agent to produce a copy of the power of attorney and such record.
2. A special proceeding may be commenced pursuant to this section for any of the following additional purposes:
(a) to determine whether the power of attorney is valid;
(b) to determine whether the principal had capacity at the time the power of attorney was executed;
(c) to determine whether the power of attorney was procured through duress, fraud or undue influence;
(d) to determine whether the agent is entitled to receive compensation or whether the compensation received by the agent is reasonable for the responsibilities performed;
(e) to approve the record of all receipts, disbursements and transactions entered into by the agent on behalf of the principal;
(f) to remove the agent upon the grounds that the agent has violated, or is unfit, unable, or unwilling to perform, the fiduciary duties under the power of attorney;
(g) to determine how multiple agents must act;
(h) to construe any provision of a power of attorney; or
(i) to compel acceptance of the power of attorney.
A special proceeding may also be commenced by an agent who wishes to obtain court approval of his or her resignation.
§5-1508 states:
A co-agent or a successor agent acting under a power of attorney shall have the authority to request, receive and seek to compel a co-agent or predecessor agent to provide a record of all receipts, disbursements and transactions entered into by the agent on behalf of the principal
§5-1510 states:
3. A special proceeding may be commenced pursuant to subdivision two of this section by any person identified in subparagraph three of paragraph (a) of subdivision two of §5-1505 of this title, the agent, the spouse, child or parent of the principal, the principal's successor in interest, or any third party who may be required to accept a power of attorney.
4. If a power of attorney is suspended or revoked under this section, or the agent is removed by the court, the court may require the agent to provide a record of all receipts, disbursements and transactions entered into by the agent on behalf of the principal and to deliver any property belonging to the principal and copies of records concerning the principal's property and affairs to a successor agent, a government entity or the principal's legal representative.
1. If the agent has failed to make available a copy of the power of attorney and/or a record of all receipts, disbursements, and transactions entered into by the agent on behalf of a principal to a person who may request such record pursuant to subparagraph three of paragraph (a) of subdivision two of §5-1505 of this title, that person may commence a special proceeding to compel the agent to produce a copy of the power of attorney and such record.
2. A special proceeding may be commenced pursuant to this section for any of the following additional purposes:
(a) to determine whether the power of attorney is valid;
(b) to determine whether the principal had capacity at the time the power of attorney was executed;
(c) to determine whether the power of attorney was procured through duress, fraud or undue influence;
(d) to determine whether the agent is entitled to receive compensation or whether the compensation received by the agent is reasonable for the responsibilities performed;
(e) to approve the record of all receipts, disbursements and transactions entered into by the agent on behalf of the principal;
(f) to remove the agent upon the grounds that the agent has violated, or is unfit, unable, or unwilling to perform, the fiduciary duties under the power of attorney;
(g) to determine how multiple agents must act;
(h) to construe any provision of a power of attorney; or
(i) to compel acceptance of the power of attorney.
A special proceeding may also be commenced by an agent who wishes to obtain court approval of his or her resignation.
¶ Compensation & Expenses
§5-1501 states:
(d) "Compensation" means reasonable compensation authorized to be paid to the agent from assets of the principal for services actually rendered by the agent pursuant to the authority granted in a power of attorney
§5-1506 states:
1. An agent is not entitled to receive compensation from the assets of the principal for responsibilities performed under a power of attorney unless the principal specifically provides for compensation in the power of attorney.
2. An agent shall be entitled to receive reimbursement from the assets of the principal for reasonable expenses actually incurred in connection with the performance of the agent's responsibilities.
¶ Liability, Remedies & Damages
§5-1505 states:
(b) The agent may be subject to liability for conduct or omissions which violate any fiduciary duty.
(c) The agent is not liable to third parties for any act pursuant to a power of attorney if the act was authorized at the time and the act did not violate subdivision one or two of this section.
¶ Florida
¶ Terminology
The term "original agent" is preferred in Florida.
¶ Entity Types
§709.2102 defines an agent as:
a person granted authority to act for a principal under a power of attorney, whether denominated an agent, attorney in fact, or otherwise.
§709.2105 states:-
The agent must be a natural person who is 18 years of age or older or a financial institution that has trust powers, has a place of business in this state, and is authorized to conduct trust business in this state
§101 defines “person” to includes individuals, children, firms, associations, joint adventures, partnerships, estates, trusts, business trusts, syndicates, fiduciaries, corporations, and all other groups or combinations.
¶ Positive Duty To Act
¶ Existence Of Fiduciary Duty
§709.2114 states that “an agent is a fiduciary”.
§709.2111 imposes a duty not to conceal breach of fiduciary duties committed by another agent.
¶ Exclusion of Positive Duty to Act
In Florida, no legislative provision expressly excludes the existence of a positive duty to act.
Whatever be the position, there are certain express duties imposed upon an agent requiring them to act, such as:-
¶ Examples of Express Obligations
§709.2114(1)(a)(4) imposes an obligation upon an agent to preserve a principal's estate plan, although if matters related to the principal's estate plan are not part of the tasks that an agent is authorized to perform this would have no operation.
§709.2114 imposes obligations upon an agent with respect to keeping records and accounting, act with care, competence and diligence, cooperate with persons with health care responsibilities and to produce records on demand to certain classes of persons (including the principal, any guardian, other fiduciary acting for the principal, welfare agencies etc.)
¶ Agent's Duties Generally
§709.2114 states that “an agent is a fiduciary”.
§709.2111 imposes a duty not to conceal breach of fiduciary duties committed by another agent.
§709.2111 alleviates an agent from any duty to review the conduct of a predecessor agent, or bring any claim against a predecessor and similar.
§709.2114 states:
(1) An agent is a fiduciary. Notwithstanding the provisions in the power of attorney, an agent who has accepted appointment:
(a) Must act only within the scope of authority granted in the power of attorney. In exercising that authority, the agent:
1. May not act contrary to the principal's reasonable expectations actually known by the agent;
2. Must act in good faith;
3. May not act in a manner that is contrary to the principal's best interest, except as provided in paragraph (2)(d) and §709.2202; and
§709.2114 states:-
(2) Except as otherwise provided in the power of attorney, an agent who has accepted appointment shall:
(a) Act loyally for the sole benefit of the principal;
(b) Act so as not to create a conflict of interest that impairs the agent's ability to act impartially in the principal's best interest;
(c) Act with the care, competence, and diligence ordinarily exercised by agents in similar circumstances; and
(d) Cooperate with a person who has authority to make health care decisions for the principal in order to carry out the principal's reasonable expectations to the extent actually known by the agent and, otherwise, act in the principal's best interest.
§709.2114 states:-
(4) If an agent is selected by the principal because of special skills or expertise possessed by the agent or in reliance on the agent's representation that the agent has special skills or expertise, the special skills or expertise must be considered in determining whether the agent has acted with care, competence, and diligence under the circumstances.
§709.2114 states:-
..an agent who has accepted appointment:
4. Must attempt to preserve the principal's estate plan, to the extent actually known by the agent, if preserving the plan is consistent with the principal's best interest based on all relevant factors, including:
a. The value and nature of the principal's property;
b. The principal's foreseeable obligations and need for maintenance;
c. Minimization of taxes, including income, estate, inheritance, generation-skipping transfer, and gift taxes;
d. Eligibility for a benefit, a program, or assistance under a statute or rule; and
e. The principal's personal history of making or joining in making gifts
§709.2114 states:-
..an agent who has accepted appointment:
(c) Must keep a record of all receipts, disbursements, and transactions made on behalf of the principal; and
(d) Must create and maintain an accurate inventory each time the agent accesses the principal's safe-deposit box, if the power of attorney authorizes the agent to access the box.
§709.2114 states:-
(6) Except as otherwise provided in the power of attorney, an agent is not required to disclose receipts, disbursements, transactions conducted on behalf of the principal, or safe-deposit box inventories, unless ordered by a court or requested by the principal, a court-appointed guardian, another fiduciary acting for the principal, a governmental agency having authority to protect the welfare of the principal, or, upon the death of the principal, by the personal representative or successor in interest of the principal's estate. If requested, the agent must comply with the request within 60 days or provide a writing or other record substantiating why additional time is needed and comply with the request within an additional 60 days.
§709.2115 states:-
"A power of attorney may provide that the agent is not liable for any acts or decisions made by the agent in good faith and under the power of attorney, except to the extent the provision:
(1) Relieves the agent of liability for breach of a duty committed dishonestly, with improper motive, or with reckless indifference to the purposes of the power of attorney or the best interest of the principal; or
(2) Was inserted as a result of an abuse of a confidential or fiduciary relationship with the principal."
¶ Compensation & Expenses
§709.2112 states:-
(1) Unless the power of attorney otherwise provides, an agent is entitled to reimbursement of expenses reasonably incurred on behalf of the principal.
(2) Unless the power of attorney otherwise provides, a qualified agent is entitled to compensation that is reasonable under the circumstances.
(3) Notwithstanding any provision in the power of attorney, an agent may not be paid compensation unless the agent is a qualified agent.
(4) For purposes of this section, the term “qualified agent” means an agent who is the spouse of the principal, an heir of the principal within the meaning of §732.103 , a financial institution that has trust powers and a place of business in this state, an attorney or certified public accountant who is licensed in this state, or a natural person who is a resident of this state and who has never been an agent for more than three principals at the same time.
¶ Liability, Remedies & Damages
§709.2111 states:-
(3) Except as otherwise provided in the power of attorney and subsection (4), an agent who does not participate in or conceal a breach of fiduciary duty committed by another agent, including a predecessor agent, is not liable for the actions or omissions of the other agent.
(4) An agent who has actual knowledge of a breach or imminent breach of fiduciary duty by another agent, including a predecessor agent, must take any action reasonably appropriate in the circumstances to safeguard the principal's best interests. If the agent in good faith believes that the principal is not incapacitated, giving notice to the principal is a sufficient action. An agent who fails to take action as required by this subsection is liable to the principal for the principal's reasonably foreseeable damages that could have been avoided if the agent had taken such action.
(5) A successor agent does not have a duty to review the conduct or decisions of a predecessor agent. Except as provided in subsection (4), a successor agent does not have a duty to institute any proceeding against a predecessor agent, or to file any claim against a predecessor agent's estate, for any of the predecessor agent's actions or omissions as agent.
709.2114 states:
(3) An agent who acts in good faith is not liable to any beneficiary of the principal's estate plan for failure to preserve the plan.
709.2114 states:
(5) Absent a breach of duty to the principal, an agent is not liable if the value of the principal's property declines.
§709.2117 states:
An agent who violates this part is liable to the principal or the principal's successors in interest for the amount required to:
(1) Restore the value of the principal's property to what it would have been had the violation not occurred; and
(2) Reimburse the principal or the principal's successors in interest for the attorney's fees and costs paid from the principal's funds on the agent's behalf in defense of the agent's actions.
§709.2301 states:
The common law of agency and principles of equity supplement this part, except as modified by this part or other state law.
§709.2303 states:
The remedies under this part are not exclusive and do not abrogate any right or remedy under any other law other than this part.
¶ Illinois
¶ Terminology
The term "initial agent" is preferred in Illinois.
¶ Entity Types
a person designated to act for the principal in the agency
§2-3 defines "agency" as the written power of attorney or other instrument of agency governing the relationship between the principal and agent or the relationship, itself, as appropriate to the context.. excluding agencies and powers for the benefit of the agent."
§2-3 defines the term “person” to include "an individual, corporation, trust, partnership or other entity, as appropriate to the agency".
¶ Positive Duty To Act
¶ Existence Of Fiduciary Duty
The legislation does not expressly state that a fiduciary duty is imposed on an agent.
§2-10.3 and §2-10.5 refer to the need for co-agents to report and not conceal a breach of fiduciary duties committed by another agent.
¶ Exclusion of Positive Duty to Act
§2-7 states:-
“The agent shall be under no duty to exercise the powers granted by the agency or to assume control of or responsibility for any of the principal's property, care or affairs, regardless of the principal's physical or mental condition”
In respect of the government form, §3-4 states:-
“The agent will be under no duty to exercise granted powers or to assume control of or responsibility for the principal's property or affairs; but when granted powers are exercised, the agent will be required to act in good faith for the benefit of the principal using due care, competence, and diligence in accordance with the terms of the statutory property power and will be liable for negligent exercise.”
¶ Agent's Duties Generally
The legislation does not expressly state that a fiduciary duty is imposed on an agent.
§2-10.3 and §2-10.5 refer to the need for co-agents to report and not conceal a breach of fiduciary duties committed by another agent.
§2-7 states:-
"The agent shall be under no duty to exercise the powers granted by the agency or to assume control of or responsibility for any of the principal's property, care or affairs, regardless of the principal's physical or mental condition.
Whenever a power is exercised, the agent shall act in good faith for the benefit of the principal using due care, competence, and diligence in accordance with the terms of the agency..
(b) An agent that has accepted appointment must act in accordance with the principal's expectations to the extent actually known to the agent and otherwise in the principal's best interests.
(c) An agent shall keep a record of all receipts, disbursements, and significant actions taken under the authority of the agency and shall provide a copy of this record when requested to do so by:… [principal, personal representative etc.]…
(d) If the agent fails to provide his or her record of all receipts, disbursements, and significant actions within 21 days after a request under subsection (c), the adult abuse provider agency, the State Guardian, the public guardian, or a representative of the Office of the State Long Term Care Ombudsman may petition the court for an order requiring the agent to produce his or her record of receipts, disbursements, and significant actions. If the court finds that the agent's failure to provide his or her record in a timely manner to the adult abuse provider agency, the State Guardian, the public guardian, or a representative of the Office of the State Long Term Care Ombudsman was without good cause, the court may assess reasonable costs and attorney's fees against the agent, and order such other relief as is appropriate.
(e) An agent is not required to disclose receipts, disbursements, or other significant actions conducted on behalf of the principal except as otherwise provided in the power of attorney or as required under subsection (c).
(f) An agent that violates this Act is liable to the principal or the principal's successors in interest for the amount required (i) to restore the value of the principal's property to what it would have been had the violation not occurred, and (ii) to reimburse the principal or the principal's successors in interest for the attorney's fees and costs paid on the agent's behalf. This subsection does not limit any other applicable legal or equitable remedies."
In respect of the government form, §3-4 states:-
“..when granted powers are exercised, the agent will be required to act in good faith for the benefit of the principal using due care, competence, and diligence in accordance with the terms of the statutory property power and will be liable for negligent exercise.”
The government form in §3-3 contains:
"The purpose of this Power of Attorney is to give your designated “agent” broad powers to handle your financial affairs, which may include the power to pledge, sell, or dispose of any of your real or personal property, even without your consent or any advance notice to you. When using the Statutory Short Form, you may name successor agents, but you may not name co-agents.
This form does not impose a duty upon your agent to handle your financial affairs, so it is important that you select an agent who will agree to do this for you.
Any agent who does act for you has a duty to act in good faith for your benefit and to use due care, competence, and diligence. He or she must also act in accordance with the law and with the directions in this form. Your agent must keep a record of all receipts, disbursements, and significant actions taken as your agent."
¶ Compensation & Expenses
In** Illinois**, there is no provision dealing with remuneration and expenses.
¶ Liability, Remedies & Damages
§2-7 states:-
“An agent who acts with due care for the benefit of the principal shall not be liable or limited merely because the agent also benefits from the act, has individual or conflicting interests in relation to the property, care or affairs of the principal or acts in a different manner with respect to the agency and the agent's individual interests. The agent shall not be affected by any amendment or termination of the agency until the agent has actual knowledge thereof. The agent shall not be liable for any loss due to error of judgment nor for the act or default of any other person..
An agent that violates this Act is liable to the principal or the principal's successors in interest for the amount required (i) to restore the value of the principal's property to what it would have been had the violation not occurred, and (ii) to reimburse the principal or the principal's successors in interest for the attorney's fees and costs paid on the agent's behalf. This subsection does not limit any other applicable legal or equitable remedies."
§2-10.3 states:
An agent is not liable for the actions of another agent, including a predecessor agent, unless the agent participates in or conceals a breach of fiduciary duty committed by the other agent. An agent who has knowledge of a breach or imminent breach of fiduciary duty by another agent must notify the principal and, if the principal is incapacitated, take whatever actions may be reasonably appropriate in the circumstances to safeguard the principal's best interest...
§2-4 states (underling added):-
“The principal may specify in the agency the event or time when the agency will begin and terminate, the mode of revocation or amendment and the rights, powers, duties, limitations, immunities and other terms applicable to the agent..”
§2-7 states:-
“An agent who acts with due care for the benefit of the principal shall not be liable or limited merely because the agent also benefits from the act, has individual or conflicting interests in relation to the property, care or affairs of the principal or acts in a different manner with respect to the agency and the agent's individual interests. The agent shall not be affected by any amendment or termination of the agency until the agent has actual knowledge thereof. The agent shall not be liable for any loss due to error of judgment nor for the act or default of any other person.”
In respect of the government form, §3-4 states:-
“..when granted powers are exercised, the agent will be required to act in good faith for the benefit of the principal using due care, competence, and diligence in accordance with the terms of the statutory property power and will be liable for negligent exercise.”
The government form contains (§3-3)
(NOTE: Your agent will be entitled to reimbursement for all reasonable expenses incurred in acting under this power of attorney. Strike out paragraph 5 if you do not want your agent to also be entitled to reasonable compensation for services as agent.)
5. My agent shall be entitled to reasonable compensation for services rendered as agent under this power of attorney.
¶ Pennsylvania
¶ Terminology
The term "original agent" is preferred in Pennsylvania.
¶ Entity Types
a person designated by a principal in a power of attorney to act on behalf of that principal.
Person is defined in §1991 to include:
..a corporation, partnership, limited liability company, business trust, other association, government entity (other than the Commonwealth), estate, trust, foundation or natural person
§5607 speaks of a corporate agent, stating:-
A bank and trust company or a trust company authorized to act as a fiduciary in this Commonwealth and acting as an agent pursuant to a power of attorney, or appointed by another who possesses such a power, shall have the powers, duties and liabilities set forth in §3321 (relating to nominee registration; corporate fiduciary as agent; deposit of securities in a clearing corporation; book-entry securities).
¶ Positive Duty To Act
¶ Existence Of Fiduciary Duty
§5601(e) (now deleted) previously stated:
"(e) Fiduciary relationship.—An agent acting under a power of attorney has a fiduciary relationship with the principal. In the absence of a specific provision to the contrary in the power of attorney, the fiduciary relationship includes the duty to:
(1) Exercise the powers for the benefit of the principal
(2) Keep separate the assets of the principal from those of an agent.
(3) Exercise reasonable caution and prudence.
(4) Keep a full and accurate record of all actions, receipts and disbursements on behalf of the principal.
§5603 speaks of renouncement of a fiduciary position and states "fiduciary" shall be deemed to include "an agent".
¶ Exclusion of Positive Duty to Act
§5601(c) in Pennsylvania requires a notice to be attached to all Powers of Attorney that states:
“This power of attorney does not impose a duty on your agent to exercise granted powers, but, when powers are exercised, your agent must use due care to act for your benefit and in accordance with this power of attorney.”
¶ Examples Of Express Obligations
An agent must act in accordance with the principal's expectations, keep records, act with care and diligence (§5601.3)
An agent must prepare and file an account if required to do so (§5610)
¶ Agent's Duties Generally
The mandatory notice in §5601 states:-
“Your agent must act in accordance with your reasonable expectations to the extent actually known by your agent and, otherwise, in your best interest, act in good faith and act only within the scope of authority granted by you in the power of attorney.”
5601.3(a) states:-
(a) General rule.--Notwithstanding any provision in the power of attorney, an agent that has accepted appointment shall:
(1) Act in accordance with the principal's reasonable expectations to the extent actually known by the agent and, otherwise, in the principal's best interest.
(2) Act in good faith.
(3) Act only within the scope of authority granted in the power of attorney.
5601.3(b) states:- ..an agent that has accepted appointment shall..
- act loyally for the principal's benefit
- keep the agents funds separate from the principal's funds unless certain exceptions apply
- not act so as to create a conflict of interest that impairs the agent's ability to act impartially in the principal's best interest.
- act with the care, competence and diligence ordinarily exercised by agents in similar circumstances
- keep a record of all receipts, disbursements and transactions made on behalf of the principal
- cooperate with health care decision makers
- preserve the principal's estate plan..
§5601.3(d) states:
Except as otherwise provided in the power of attorney, an agent shall not be required to disclose receipts, disbursements or transactions conducted on behalf of the principal unless ordered by a court or requested by the principal, a guardian, conservator, another fiduciary acting for the principal, governmental agency having authority to protect the welfare of the principal or, upon the death of the principal, the personal representative or successor in interest of the principal's estate.
(2) Within 30 days of the request, the agent shall either comply with the request or provide a writing or other record substantiating the reason additional time is needed, in which case the agent shall comply with the request within an additional 30 days.
§5604 states:-
"(d) Discovery of information and records regarding actions of agent.--
(1) If the agency acting pursuant to the act of November 6, 1987 (P.L. 381, No. 79), known as the Older Adults Protective Services Act is denied access to records necessary for the completion of a proper investigation of a report or a client assessment and service plan or the delivery of needed services in order to prevent further abuse, neglect, exploitation or abandonment of the older adult principal reported to be in need of protective services, the agency may petition the court of common pleas for an order requiring the appropriate access when either of the following conditions applies:
(i) the older adult principal has provided written consent for confidential records to be disclosed and the agent denies access; or
(ii) the agency can demonstrate that the older adult principal has denied or directed the agent to deny access to the records because of incompetence, coercion, extortion or justifiable fear of future abuse, neglect, exploitation or abandonment.
(2) This petition may be filed in the county wherein the agent resides or has his principal place of business or, if a nonresident, in the county wherein the older adult principal resides. The court, after reasonable notice to the agent and to the older adult principal, may conduct a hearing on the petition.
(3) Upon the failure of the agent to provide the requested information, the court may make and enforce such further orders.
(4) A determination to grant or deny an order, whether in whole or in part, shall not be considered a finding regarding the competence, capacity or impairment of the older adult principal, nor shall the granting or denial of an order preclude the availability of other remedies involving protection of the person or estate of the older adult principal or the rights and duties of the agent."
***(e) Definitions.--*As used in this section, the following words and phrases shall have the meanings given to them in this subsection:
“Abandonment.” As that term is defined in the act of November 6, 1987 (P.L. 381, No. 79), known as the Older Adults Protective Services Act.
“Abuse.” As that term is defined in the act of November 6, 1987 (P.L. 381, No. 79), known as the Older Adults Protective Services Act.
“Agency.” As that term is defined in the act of November 6, 1987 (P.L. 381, No. 79), known as the Older Adults Protective Services Act, except that in cities of the first class the term shall mean the Department of Aging.
“Exploitation.” As that term is defined in the act of November 6, 1987 (P.L. 381, No. 79), known as the Older Adults Protective Services Act.
“Neglect.” As that term is defined in the act of November 6, 1987 (P.L. 381, No. 79), known as the Older Adults Protective Services Act.
“Older adult principal.” A principal who is 60 years of age or older.
§5610 states:
An agent shall file an account of his administration whenever directed to do so by the court and may file an account at any other time. All accounts shall be filed in the office of the clerk in the county where the principal resides. The court may assess the costs of the accounting proceeding as it deems appropriate, including the costs of preparing and filing the account.
¶ Special Expertise
§5601.3 states:
If an agent is selected by the principal because of special skills or expertise possessed by the agent or in reliance on the agent's representation that the agent has special skills or expertise, the special skills or expertise must be considered in determining whether the agent has acted with care, competence and diligence under the circumstances..
¶ Compensation & Expenses
§5609 states:
(a) Compensation.--In the absence of a specific provision to the contrary in the power of attorney, the agent shall be entitled to reasonable compensation based upon the actual responsibilities assumed and performed.
(b) Reimbursement for expenses.--An agent shall be entitled to reimbursement for actual expenses advanced on behalf of the principal and to reasonable expenses incurred in connection with the performance of the agent's duties.
¶ Liability, Remedies & Damages
§5601.3(c) states:
(c) Nonliability of agent.--
(1) An agent that acts in good faith shall not be liable to a beneficiary of the principal's estate plan for failure to preserve the plan.
(2) An agent that acts with care, competence and diligence for the best interest of the principal shall not be liable solely because the agent also benefits from the act or has an individual or conflicting interest in relation to the property or affairs of the principal.
(3) If an agent is selected by the principal because of special skills or expertise possessed by the agent or in reliance on the agent's representation that the agent has special skills or expertise, the special skills or expertise must be considered in determining whether the agent has acted with care, competence and diligence under the circumstances.
(4) Absent a breach of duty to the principal, an agent shall not be liable if the value of the principal's property declines.
(5) An agent that exercises authority to delegate to another person the authority granted by the principal or that engages another person on behalf of the principal shall not be liable for an act, error of judgment or default of that person if the agent exercises care, competence and diligence in selecting and monitoring the person.
There are dedicated pages of this Wiki about:-
Appointment of Agents
Binding Signature of An Agent
Obligations of An Agent
Entitlements & Liabilities of an Agent
Albeit in reliance upon §4263 only in respect of a Power of Attorney for a person that is not excluded from the ambit of the legislation. ↩︎
Being a Power of Attorney for a person that is not excluded from the ambit of the legislation - click here to read more. ↩︎
In the legislation governing Powers of Attorney for persons in the Six (6) Greater States. ↩︎
See §709.2114(b). ↩︎
Although §4231.5(d) imposes harsh penalties for an agent who acts improperly. ↩︎ ↩︎
See §5601.3(c) in California §709.2114(4) in Florida and §4231(b) in Pennsylvania - legislation in Illinois New York and Texas contains no express reference to this principle. ↩︎ ↩︎
Consider for example 304.003(4) with respect to trustee corporations in Texas. ↩︎
See §811 with respect to determining capacity to contract.) ↩︎
See §811 with respect to determining capacity to contract.) ↩︎
Click here to read more. ↩︎
Being not a Power of Attorney excluded from the ambit of the legislation - click here to read more. ↩︎
Being not a Power of Attorney excluded from the ambit of the legislation - click here to read more. ↩︎
Ibid. ↩︎
Click here to read more. ↩︎
Being not a Power of Attorney excluded from the ambit of the legislation - click here to read more. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Being not a Power of Attorney excluded from the ambit of the legislation - click here to read more. ↩︎
Being not Powers of Attorney excluded from the ambit of the legislation - click here to read more. ↩︎
Ibid. ↩︎
Click here to read more. ↩︎
Being not a Power of Attorney excluded from the ambit of the legislation - click here to read more. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Being not Powers of Attorney excluded from the ambit of the legislation - click here to read more. ↩︎
Being not a Power of Attorney excluded from the ambit of the legislation - click here to read more. ↩︎
Ibid. ↩︎
Being not Powers of Attorney excluded from the ambit of the legislation - click here to read more. ↩︎
Being not a Power of Attorney excluded from the ambit of the legislation - click here to read more. ↩︎
Ibid. ↩︎
Being not Powers of Attorney excluded from the ambit of the legislation - click here to read more. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Being not a Power of Attorney excluded from the ambit of the legislation - click here to read more. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Being not Powers of Attorney excluded from the ambit of the legislation - click here to read more. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Being not a Power of Attorney excluded from the ambit of the legislation - click here to read more. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Being not Powers of Attorney excluded from the ambit of the legislation - click here to read more. ↩︎
Being not a Power of Attorney excluded from the ambit of the legislation - click here to read more. ↩︎
Ibid. ↩︎
Being not Powers of Attorney excluded from the ambit of the legislation - click here to read more. ↩︎
Being not a Power of Attorney excluded from the ambit of the legislation - click here to read more. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Ibid. ↩︎
- ↩︎ ↩︎
Ibid. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Ibid. ↩︎
See for example §5612 in Pennsylvania and §709.2301 in Florida. ↩︎
Also, there is recognition of a successor agent as an ‘alternate’ agent (§4014). ↩︎
See §811 with respect to determining capacity to contract. ↩︎