Financial Power Of Attorneys To Help You Manage Your Money
A financial power of attorney allows someone to select another person to make financial decisions for them if they become incapacitated and are unable to make decisions for themselves. Unlike the medical power of attorney, a financial power of attorney can be granted to someone else, even if the party granting the power of attorney has full capacity. Although the document itself may come with any of a variety of titles, a commonly used financial power of attorney is known as the Statutory Durable Power of Attorney. The document, depending on the wishes of the client, might become effective immediately, or may become effective only on the occurrence of a future event, such as the client’s (or principal’s) incapacity.
Many clients view the financial power of attorney simply as one of convenience, and they can, in fact, be very convenient. It might help, for example, to give a family member or loved one the ability to sign checks for routine expenses, or permit them to deal with a principal’s bank accounts when the principal is not in a position to do so for herself. When the principal selects this responsible person (or agent,) they often do so because there is a natural trust or confidence between the two.
However, even in these naturally-trusting relationships, the potential for abuse exists, even if it is minimal. For example, what happens when the agent changes the mailing address on the bank statements to his address, instead of the principal’s, and fails to keep the principal advised of the financial activities? What happens when the principal receives no response to questions about the agent’s recent actions?
Beyond matters of simple convenience, powers of attorney create a legal relationship between the principal and the agent. When acting, the agent becomes a fiduciary to the principal, and owes certain and specific legal obligations. One of these primary duties is an obligation to act only in the manner that the principal directs. Another duty of the agent, often overlooked in my experience, is a legal obligation to account to the principal.
Texas law requires an agent to inform and account to the principal of his or her actions. Agents should keep careful and accurate records of their activities and transactions, as a principal may demand a detailed accounting of such things at whatever time they choose. If the agent fails to provide it, the principal may revoke the power of attorney, or may even file suit against the agent to compel the production of the accounting. Many times, these steps will not prove necessary, but the remedies serve to remind the agent that it is the principal running the show.
Although nobody ever anticipates having to file suit to keep their agent in line, the availability of such a remedy should give agents reason enough to act correctly, and should give principals reason enough to exercise care and caution when selecting their agent. If you would like guidance is how to hold an agent accountable, talk to our experienced estate litigation attorneys by calling 713-352-0937 or send an email.