My father, actually stepfather, is thinking of appointing me as his durable attorney-in-fact.

What does this require of me?

Under a general financial power of attorney you will be appointed to represent your step-father, the principal, with respect to his financial affairs. This means you are in a fiduciary relationship and held to high standards of good faith, fair dealing and undivided loyalty with respect to your father’s assets. You must act in his best interests, keeping his goals and wishes in mind when making any discretionary decisions. Additionally you could be expected to pay his bills, file taxes, make investment decisions and handle any issues concerning his real and personal property. However, your duty covers only your own actions, not those of your stepfather. Sometimes attorneys-in-fact handle the bills because an elderly parent has a mobility issue, but the parent prefers to stay in touch with their own financial advisors.

Depending on the wording in the document creating the power of attorney, your authority may only come into effect when an event described in the instrument takes place. For example one or more physicians may need to sign letters stating your step-father is not capable of handling his own affairs. Durable refers to the fact that the authority given to you will continue even if your step-father is incompetent. Durable powers of attorney are usually executed to prevent the possibility of a legal proceeding to have a conservator appointed over an incompetent person’s property and monies. As such powers of attorney literally save a family thousands of dollars and a great deal of emotional stress.

You should examine the document as there may be one or more persons named before you to take responsibility for financial matters or you may be required to act jointly with another person as agents and attorneys-in-fact for the principal. While not favored by elder law professionals, some durable powers of attorneys are drafted to include health care proxy provisions and this might expand your responsibilities. It’s important for the attorney drafting the power of attorney to know you are a step-child since some standard provisions discuss issue or the bloodline of the principal and these will likely need to be customized for your step-father’s situation. In South Carolina a financial power of attorney needs to be recorded before it is valid, S.C.Code Ann. §62-5-501(C) and it must not have been revoked. Validity can be established by affidavit or a recent certified copy of the document obtained from the local clerk of court or RMC office.

It’s important that you keep good records so you can answer any questions that arise over your handling of monies and assets. Never commingle the funds you have been entrusted to manage with your personal money. Keep separate accounts even if your name has been added to the principal’s checking or savings account as a payable on death beneficiary. The easiest way to keep tract is to run all funds for the principal through a checking account. The checks act as receipts and the checkbook register is a running account, which should be balanced monthly. Many powers of attorney require a periodic accounting to the principal or other family members. Failure to communicate what you are doing with an elderly person’s funds is a sure way to create mistrust and raise suspicions in a family, especially because you are a step-child and there may be biological children.

In some cases the principal may have agreed to pay you for acting on his behalf by so stating in his document. In many cases family members do not want to be paid, but if you do be sure to contact an accountant or CPA so you address withholdings and file the necessary tax forms.

A power of attorney terminates on the death of the principal.

 

Disclaimer:  Information contained in this column is meant to be of general information on frequently asked questions concerning disability, elder law, estate planning and probate law, and does not contain specific legal advice to a client.  No attorney-client relationship is created by reading this column.

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