Duties of Agent to Principal

                Powers of Attorney, both financial and health care, are important documents to allow an agent to act on behalf of a person (principal).  If you are named an agent what are your responsibilities to the principal?  First you must determine if the power of attorney is in effect or if it is necessary to obtain a physicians’’ certification in order for the power of attorney to be effective.  Once the power of attorney is in effect you are required to consult with the principal and find out his or her needs and desires.  If the principal is mentally incapacitated the agent is required to consult with others to understand the needs of the principal.  You are acting on behalf of the principal so you are acting in his or her best interest and what he or she would do, not what you consider appropriate.  Professionals can assist you in making decisions on behalf of the principal, but the agent is required to make the decisions.  The agent must keep detailed records of income and expenses and investment of assets.  Since the agent can be removed and can be sued for failure to adequately perform his or her duties, the agent must be prepared to document the information on which decisions were made and rationale for the decisions.  The agent can be compensated for serving in the role of agent and can be reimbursed for expenses paid for the benefit of the principal.  However any compensation received will have to be reported as income on the agent’s tax returns.  The agent’s duty is to the principal and not to any heirs or beneficiaries under a will or trust.  So an agent must carefully consider decisions for the benefit of the principal and their short and long term consequences.