The Power of Attorney Document
Concerns: Liability and Authority
Your role as an agent for a disabled or incompetent person is a serious matter and brings with it responsibility and potential liability. If you are named as an agent, you should review the relevant statutes in order to understand your authority and responsibilities. See below for concerns regarding a Durable Power of Attorney (DPOA) document.
If, after reviewing the statutes and the power of attorney document, you are still not comfortable with or certain about your powers and responsibilities, you will want to talk to your attorney. Your attorney can review the power of attorney document with you and clarify your role.
As you are operating as agent, a variety of issues may arise. The following are examples of common sources of confusion you may face:
Third parties won’t honor my power of attorney.
Early in the process show the DPOA to people you will be dealing with, such as bankers, brokers, to make sure they will honor your DPOA. They may have their own DPOA that they will want the principal to sign, and that will have to be done while the principal is still competent.
A third party wants proof of my power of attorney.
A third party you are trying to deal with may want you to complete an affidavit form testifying that you are the attorney-in-fact and that the DPOA has not been changed or revoked, that the principal is still alive, and that you are acting in good faith under the DPOA. The statute authorizes a third party to require such an affidavit, so be advised that you may have to deliver such affidavits to some third parties.
My family members disagree with my decisions.
If an unpopular decision has to be made as attorney-in-fact, and you expect criticism from others, you may want to consider getting the approval of a judge before you make the decision.
I need professional advice. How do I pay for it?
Procedures for hiring and paying attorneys or other professionals, such as accountants or financial advisors, is often addressed in the DPOA. If it is not, the statutes allow fees and reimbursement for costs you incur while carrying out your duties as attorney-in-fact.
What don’t I have the power to do?
An attorney in fact does not have the power, unless it is specifically provided in the power of attorney document, to alter life insurance, annuity, or similar contract beneficiary designations, or amend trust agreements or registration of securities in beneficiary form. These are just some of the limitations. Be sure to read the statute and the power of attorney so you are aware of all the limitations. Depending on unique circumstances, some people will include particular limitations in the power of attorney, especially regarding gifting.
What about gifting?
The attorney-in-fact cannot make gifts of the principal’s property unless specified in the document, pursuant to Washington statutes. The statutes are detailed and sometimes multiple statutes apply. If you want to give gifting authority to your agent, discuss the details with your attorney.
Can gifts to the attorney-in-fact become problematic?
Gifts from the principals to the attorney-in-fact can raise all sort of issues. In a recent case (Karnath v Sampson et al.) in the Washington court of appeals, the court held that if the person who receives a gift from the principal has a confidential or fiduciary relationship with the principal, that recipient has the burden to prove that the gift was intended and not a result of undue influence. Further, the gift recipient has a high burden of proof: clear, cogent, and convincing evidence is required to convince the court that the gift is not a result of undue influence. The case is worth reading because it describes a not uncommon situation: a person becomes a caregiver for an elderly person, and later that elderly person deeds property to the younger caregiver, often in gratitude for the service. The caregiver may have devoted many years caring for the elderly person. In Karnath v Sampson et al., the court describes some of the factors that go into determining whether or not there was an undue influence. To avoid legal troubles, if the principal is planning to gift to you, the attorney-in-fact, you should consult your a
ttorney about how to show clearly that the gift is intended and not a product of undue influence.
This information is general in nature and should not be relied upon for your specific circumstances. For information, questions, or comments, please contact Douglas J. Engel or Kathryn S. Kumar.