This week’s column is on types of power of attorney documents and agent’s duties.
The main types of power of attorney documents are a Medical Power of Attorney (which gives authority for your agent to make medical and personal decisions), a Financial or General Power of Attorney (which gives your agent authority to manage your finances, property and to transact business on your behalf) and a Limited or Special Power of Attorney (which grants legal authority to an agent to perform specific acts, such as to sell a particular parcel of real estate on your behalf).
An agent’s duties are to act in the principal’s best interest, or in accordance with the actually known, reasonable expectations of the principal. All actions by the agent must be within the scope of authority granted in the power of attorney, and be undertaken in good faith, with reasonable care and diligence. The agent must also keep an accurate accounting with details of all payments, receipts and significant transactions taken under the power of attorney.
Unfortunately, power of attorney documents give an agent the opportunity to take advantage of you, through financial exploitation, or other unauthorized use of your funds, property or income for the agent’s profit or advantage, which requires prompt reporting. Thus, if you suspect that an agent is abusing or misusing their authority under a power of attorney, you should take immediate action, including to request an accounting, revoking the power of attorney and notifying any people or institutions that may have been given a copy of the power of attorney.
Similarly, if you suspect someone else’s agent is misusing a power of attorney, or if you suspect that a principal did not, or could not understand or was coerced into signing a power of attorney, you should contact Adult Protective Services to report your concerns. Importantly, if an agent has misused a power of attorney, the court can require the agent to return any stolen assets under various legal remedies.
An agent who wants to resign may do so by notifying the principal, any successor agent named in the power of attorney and all third parties who are reasonably known, who might be affected by the resignation. Otherwise, a power of attorney terminates under the law when:
The principal dies and the agent has knowledge of the death;
The principal becomes incapacitated (if the power of attorney is not durable);
The principal revokes the power of attorney; and
The power of attorney terminates under its provisions.
It is important to note that the termination of an agent’s authority to act under a power of attorney is not legally effective until the agent has actual knowledge of the termination.
Finally, a power of attorney is valid in any state, regardless of where the principal lived when the power of attorney was signed. Nevertheless, laws regarding powers of attorney vary from state to state, and its recommended that if you have power of attorney documents from another state, signed prior to moving to Colorado, you have these documents reviewed by a Colorado estate planning attorney for their meaning and effect under Colorado Law.
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