Takeaways
- As an agent under a power of attorney, you are a fiduciary and must act in the principal’s best interest.
- Your authority comes from the legal document — you can only do what the power of attorney allows and what state law permits.
- Good records and separate accounts are your best protection against misunderstandings and legal trouble.
- A power of attorney ends at death, and agent authority is different from being an executor or trustee.
Being named someone’s “Agent” (in earlier times referred to as “attorney-in-fact”) under a power of attorney can feel like an honor — and a lot of pressure. A financial power of attorney lets you handle certain money and property matters for the person who signed it (the “principal”). There are also health care powers of attorney. But here we discuss financial ones.
If you’ve just stepped into this role, it helps to understand (1) what you’re allowed to do, (2) what you must do, and (3) what you should avoid.
Below are nine common questions people ask about being an agent under a power of attorney.
1) What are my duties as an agent under a power of attorney?
Your job is to act for the principal on the financial matters the document authorizes. Depending on the type of power of attorney (POA) and how the document is written, that can include things like paying bills, managing bank accounts, signing contracts, handling insurance issues, and dealing with investments. Some powers of attorney are for specific actions, such as signing papers at a real estate closing or signing papers related to some other specific purpose, such a signing papers in a business transaction. These are referred to as “limited” or “special” powers of attorney. Here, we discuss general powers of attorney, meant to cover many different situations.
Two practical rules can help keep you on track:
- Follow the document. If the power of attorney doesn’t grant a power (for example, making gifts or changing beneficiary designations), don’t assume you can do it. In Pennsylvania, the power of attorney instrument must expressly grant such authority and, as regards gifting, elaborate on what, when and why, and to whom an agent can gift.
- Act like a careful, honest steward. You’re handling someone else’s money — treat it at least as carefully as you would treat your own. Moreover, as note George Vasiliadis, an attorney with the law firm of Vasiliadis Pappas Associates, “if you are personally inclined to take what could be considered unreasonable risks with your own money, that’s fine. It’s your money and it’s a free country. But as a “fiduciary” you don’t have that right.”
2) What does it mean to be a “fiduciary”?
A fiduciary is someone who must act with loyalty, honesty, and care for another person’s benefit.
As an Agent, that means:
- Acting in the principal’s best interest (not yours)
- Avoiding conflicts of interest
- Keeping the principal’s money separate from your own
- Keeping good records
- Following any instructions in the power of attorney.
This role is not the same as being a trustee or executor. A trustee manages trust property under the trust terms, and an executor (personal representative) manages an estate after someone dies. A power of attorney is used during the principal’s lifetime and automatically expires upon the principal’s death.
3) Can I be held personally liable for my actions as agent?
Potentially, yes.
In Pennsylvania and most if not all other states, an agent can be held responsible for losses caused by violating fiduciary duties — for example, self-dealing, misusing funds, failing to follow the document, or keeping poor records that make transactions impossible to explain.
That said, being an agent does not automatically make you personally responsible for the principal’s bills or debts. Your role is to manage the principal’s finances using the principal’s funds — not to pay out of your own pocket.
If you’re in a situation where someone is pressuring you to sign in a way that could create personal liability, it can help to speak with an estate planning attorney before you act. When signing, ALWAYS be sure that a designation such as “POA” or “Agent under Power of Attorney” is included. Failing to do that can be interpreted as your acting on your own behalf, not your principal’s.
4) When does a power of attorney take effect?
It depends on how the document is written.
- Some powers of attorney are effective immediately after signing. This is the preferred method.
- Others are “springing,” meaning they only become effective after a specific event happens (often the principal’s incapacity, usually proven in the way the document requires).
If the document is effective immediately, the principal will typically expect you to wait to use it unless you’re needed. And in some cases, an agent never needs to step in. Problems often arise with financial institutions and other third-parties refusing to timely honor a springing power of attorney. That can lead to adverse, sometimes disastrous financial consequences.
5) What if there is more than one agent?
Co-agents can be set up to act:
- Independently (either agent can act alone), referred to as “joint & several”, or
- Together (agents must agree and sign/act jointly), or
- In a mixed arrangement (for example, independent for routine banking but joint for selling real estate).
What matters is the wording of the document.
Even if you can act independently, coordination is smart. Miscommunication between co-agents can lead to duplicated payments, contradictory investment decisions, or conflict with banks and financial institutions.
6) Can the principal “fire” me or revoke the power of attorney?
Yes. As long as the principal has the legal capacity to do so, the principal can revoke the power of attorney (and your authority) at any time.
In Pennsylvania, depending on the situation, a court can, after a hearing, declare the principal “incapacitated”, revoke the power of attorney, and appoint a “Guardian of the Estate” to handle the principal’s financial affairs. A court-appointed guardian lacks the flexibility available to an agent under power of attorney and must seek court approval for most actions.
7) What records should I keep as an agent?
Good recordkeeping protects the principal and protects you.
At minimum, keep:
- A list of accounts you manage
- Statements and invoices
- Receipts for purchases
- A log of major actions (for example, “Paid property taxes,” “Canceled auto insurance,” “Sold investments to cover care costs”)
Two best practices:
- Keep money separate. NEVER mix the principal’s funds with yours (“commingling”), even temporarily, unless you are married and co-own the funds or if unmarried, pursuant to an attorney-approved estate plan
- Make the paper trail easy to follow. Many agents run transactions through a dedicated checking account so there’s a clear, chronological record.
If you’re unsure how long you’ll need documentation, err on the side of keeping records longer rather than shorter.
8) Can I resign, and can I be paid for being an agent?
Yes — but the details matter.
- Resigning:You need to give notice to the principal and third parties who rely upon the power of attorney and provide the principal with your records.
- Compensation:In Pennsylvania, an agent is entitled to reasonable compensation. But it is prudent for this to be expressly included in the written power of attorney.
9) What if a bank or other institution refuses to accept the power of attorney?
This happens more often than people expect, especially if the document is older or the institution has its own internal review process.
Practical steps that usually help:
- Ask what, specifically, they need. Some banks want the POA reviewed by their legal department, a certification/affidavit, or an “agent’s acknowledgment.”
- Confirm you’re presenting the right version. Institutions often want a clear copy of the full document (all pages) and may require a certified copy if it’s been recorded.
- Check whether the POA grants the power you’re trying to use. For example, authority to access certain accounts, handle retirement plan transactions, or deal with real estate may need to be explicitly stated.
- Escalate politely. If a front-line employee says “we don’t accept POAs,” ask for a supervisor or the legal/compliance department.
If you’re blocked and time matters (for example, bills are going unpaid or care costs are due), an elder law or estate planning attorney can help you respond in a way that aligns with state law and the institution’s requirements.
A Final Caution: A Power of Attorney Ends at Death
A common point of confusion is what happens after the principal dies. A power of attorney ends at death, and the person in charge becomes the executor named in a will or appointed by a court.
Notes Dionysios Pappas, an Attorney with the law firm of Vasiliadis Pappas and Associates, “If you are worried about doing the right thing — or you’re facing family conflict, questions about gifting, or possible accusations — it can be wise to get guidance from an experienced estate planning /elder law attorney before you act.
The lawyers at Vasiliadis Pappas Associates have extensive experience with drafting and using powers of attorney.
