Episode 102 - Hosted by Jill Mastroianni
Your mom, dad, or another family member asks you to serve as their agent under a power of attorney. You want to help. But do you understand what you're agreeing to?
Serving as someone's agent under a financial power of attorney is more than helping them pay a few bills. You're accepting legal responsibilities, potential liability, and a job that could become much more demanding than you anticipated.
In this episode of The Death Readiness Podcast: Not Your Dad’s Estate Planning Podcast, estate planning attorney Jill Mastroianni shares seven things to consider before accepting an appointment under a power of attorney, including questions professional fiduciaries ask before agreeing to serve.
You'll learn what to look for in the estate planning documents, how to protect yourself, and why being asked to serve doesn't mean you have to say yes.
What You'll Learn in This Episode
When do your responsibilities under a power of attorney begin? Being named as an agent doesn't mean you've agreed to serve. Learn the difference between an immediate power of attorney and a springing power of attorney, which becomes effective upon incapacity, and why you need to understand when your authority and responsibilities begin.
What financial information should you have before agreeing to serve? A power of attorney gives you legal authority, but it doesn't tell you where Mom banks, which bills are automatically paid, or who manages her investments. Find out what information you should ask for before you're responsible for managing someone else's financial affairs.
Can you get paid for serving as an agent under a power of attorney? Managing someone else's finances can become a significant commitment. Learn why you should review the compensation provisions before accepting the appointment, even if you don't currently intend to charge for your time.
What records should you keep when acting under a power of attorney? Keeping accurate records is one of the most important responsibilities of an agent. Learn why you should document financial transactions, save receipts, keep the principal's money separate from your own, and understand your accounting obligations.
Can you be sued for decisions you make as an agent? Serving under a power of attorney comes with potential legal liability. Learn why you should review provisions addressing liability and indemnification, including whether the document provides protection for actions taken responsibly and in good faith.
Can you resign as an agent under a power of attorney? Your circumstances may change. Learn why you should understand the resignation process, notice requirements, and successor-agent arrangements before accepting the responsibility.
Can you make gifts using someone's power of attorney? Just because a power of attorney authorizes gifts doesn't necessarily mean the principal would approve of every gift you might make. Learn why it's important to discuss gifting authority, family expectations, and potential conflicts before you find yourself caught in the middle of a family disagreement.
What If You Don't Want to Serve?
Being named as someone's agent under a power of attorney doesn't mean you're obligated to accept the responsibility.
Jill also discusses why it's okay to decline a fiduciary appointment, what alternatives may be available, and why the attorney who prepared the estate planning documents isn't necessarily an attorney representing you.
The takeaway? You can love someone, want to help them, and still decide that serving as their agent under a power of attorney isn't the right job for you.
Resources & Links
The Death Readiness Playbook is an educational guide and hands-on workbook that helps you understand the legal, financial, and practical considerations involved in preparing for incapacity and death. https://www.deathreadiness.com/playbook
Printed Worksheets Book: $11: https://www.deathreadiness.com/store/p/the-death-readiness-playbook-worksheets
Free Digital Worksheets: Access individual worksheets to begin organizing important information. https://www.deathreadiness.com/resources/important-information-sheets
Other Power of Attorney Episodes:
Episode 17: How Powers of Attorney Work, When to Use Them, and When It’s Too Late to Get One: Audio: https://www.deathreadiness.com/podcast/episode-17-how-powers-of-attorney-work-when-to-use-them-and-when-its-too-late-to-get-one
Episode 68: Why Good Powers of Attorney Still Fail
Audio: https://www.deathreadiness.com/podcast/68
Video: https://youtu.be/HFTrcY1nsgY?si=dJESo3sUQcmsCaI_
Episodes with professional fiduciary Sara Ecklein:
Episode 16: How to Prevent your Estate Plan from Becoming a Family Battlefield
Episode 33: Why Your Aging Parents Aren’t Planning and How to Change It
Connect with Jill:
· Website: https://www.deathreadiness.com/
· Email: jill@deathreadiness.com
· Learn more about Jill’s services: https://www.deathreadiness.com/solutions
· Subscribe to the Death Readiness Dispatch! https://www.deathreadiness.com/subscribe
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Someone asks you to serve as agent under their power of attorney. Maybe it's your mom, your dad, an aunt, or a close friend. They trust you and they need your help. You want to say yes. But do you know what you're agreeing to?
Today, I'm going to give you some of the questions professional fiduciaries ask before accepting this responsibility, so you can protect yourself, understand the job, and be better prepared to help someone you care about. And we're also going to talk about why it's perfectly okay to say no.
Welcome to The Death Readiness Podcast. This is not your dad’s estate planning podcast. I’m Jill Mastroianni — estate planning attorney, death readiness guide, and your translator for wills, trusts, probate, and the conversations most families avoid. If you’ve been wondering things like, ‘Can a trust protect what I leave to my children?’ ‘What happens if I give someone power of attorney over me?’ and ‘How can I help my parents while respecting their independence?’ You’re in the right place.
When I was visiting a friend in California recently, I borrowed her car to meet another friend for a hike. There was a lot of traffic, and even though I had a green light. I had to stay put or I’d be blocking the intersection.
The woman behind me honked. And when I looked in my rearview mirror, she was throwing up her arms in exasperation and franticly motioning for me to move forward.
Now, I really don't like driving. And I especially don't like driving someone else's car in an unfamiliar area, which was exactly what I was doing. So when I heard the honking and saw the dramatic gestures, I double-checked to make sure I hadn't done anything wrong.
But the traffic was bumper to bumper. If I pulled forward, the only space available was in the middle of the intersection. And I wasn't going to do that. So I waited.
The woman behind me was clearly unhappy. But her unhappiness wasn't going to make blocking the intersection any less embarrassing. And I tell you this because we're constantly being pressured to do things that might not be in our best interests. Sometimes the pressure comes from strangers and sometimes it comes from people we love. And sometimes when someone needs help, the person applying the most pressure is ourselves, because we feel guilty about saying no.
The person I was meeting for that hike was Sara Ecklein. Sara is a professional fiduciary in California. That means she serves in roles like trustee, executor, and agent under a power of attorney. She was a guest on this podcast, and I was a guest on hers last year. I'll link to those episodes in the show notes.
Sara and I talked about some of the lessons we've learned from working with clients and their families. And one thing I've been thinking about since that conversation is that professional fiduciaries have standards for the appointments they're willing to accept. They don't just say yes because someone asks.
They review the documents, consider the responsibilities, and make sure they have the information, authority, protections, and resources necessary to do the job. But when a family member or close friend asks us to serve, we often skip all of that and say yes. But why?
Well, we’re flattered that someone trusts us with such an important responsibility. We feel obligated because they’re family. Or maybe we’re thinking, well, somebody has to do it. But before you say yes, I want you to understand exactly what you're agreeing to. I want you to know what questions to ask and what information and protections you might want to consider. And just as importantly, I want you to know that saying no is an option, too.
Today, I’m specifically talking about serving as an agent under a financial power of attorney but you can use a lot of what you learn today in evaluating whether to accept an appointment as any fiduciary, like an executor or a trustee.
I’ve already released a couple of episodes on powers of attorney that I’ll link to in the show notes if you’d like to learn a little more about what they are and how they work.
But here’s some quick background for today’s conversation. A financial power of attorney is a legal document that allows one person, called the principal, to authorize another person, called the agent, to act on their behalf to do things like pay bills and manage investments.
There are two types of financial powers of attorney: immediate and springing. An immediate power of attorney takes effect as soon as it’s signed. For example, the power of attorney I granted to my husband Jeremy is immediate, meaning he can act today to make decisions for me.
This means that even while I have full mental capacity, he could use it to, say, sell our house without my knowledge. That’s the tradeoff.
The other type of power of attorney is a springing power of attorney, which only takes effect upon incapacity. For it to “spring” into effect, there must be a determination of incapacity as the power of attorney document itself defines incapacity. Often, this means one or two physicians must sign a statement saying the person is no longer capable of managing their own affairs.
If you do serve as agent under a power of attorney, you’re serving in a fiduciary capacity. A fiduciary is someone who has a legal responsibility to act in another person's best interests. You have certain legal duties to act in their interests, follow their lawful instructions, avoid conflicts of interest, and keep appropriate records. It’s a job, not a quick favor.
So today, I'm walking you through seven things I'd want to know before agreeing to serve as someone's agent under a power of attorney.
First, understand when your responsibilities begin. being named in a power of attorney document doesn't mean you've immediately taken on every responsibility associated with serving. The rules about acceptance and when duties begin vary by state and by document. Under Tennessee powers of attorney, the agent is appointed to serve, but the agent doesn’t actually sign a document agreeing to serve. So, anyone in Tennessee could name me or you as agent under their power of attorney and we would have no idea.
But just because we’ve been named doesn’t mean we’re required to, or will agree to, serve. In New York State, however, the power of attorney requires the appointed agent to sign an acceptance of the appointment. I urge you not to sign anything accepting an appointment or act in the capacity of agent until you’re comfortable that you’re willing and able to serve in that role. Because once you begin acting, you're doing more than helping someone with a few errands. And, it can be legally more difficult to stop serving once you’ve already started than to decline to serve from the beginning.
Before you agree to serve, find out when your authority becomes effective and when your responsibilities begin. I mentioned earlier that some powers are effectively immediately and others are springing, meaning they take effect upon incapacity.
If you're being named under a springing power of attorney, I want you to ask a few additional questions. Who determines that the principal is incapacitated? Is it one doctor? Two doctors? Is there a particular certification that has to be signed? Does the person asking you to serve have a primary care physician that they see on at least an annual basis? Who is that physician?
We just talked about understanding when your responsibilities under a power of attorney begin. The second thing I’d like you to know is what you’re going to be managing.
Maybe you don't need to know the exact value of every asset right now but knowing what exists is important. Does your mom have three bank accounts or seven? Does your dad own real estate in another state? Is there a tenant and a lease? Where are Aunt Jane’s retirement accounts? Who manages the investments? Is there life insurance? Is there long term care insurance? Is there a family business? Where are the governing documents? Are there automatic payments coming out of a checking account?
Legal authority without information can leave you spending weeks trying to figure out how someone's life works. And you may be trying to do all of this in the middle of a medical crisis. Before agreeing to serve as someone's agent under a power of attorney. I'd want them to organize the information I'd need to do the job.
This is actually one of the reasons I created The Death Readiness Playbook. It includes worksheets to help you organize the information someone else would need to step in and manage your affairs. And you don't even need the full educational guide to get started. The separated printed worksheets book is just $11, and I'll link to it in the show notes. I'll also link to some individual digital worksheets you can access for free.
But here's what I really want you to take away from this. If someone wants you to take responsibility for managing their affairs someday, it's reasonable to expect them to do some work today to make that possible. And if they're unwilling to share the information you'll need to do the job? That's something I'd think very seriously about before agreeing to serve.
Okay, we’ve just gone through understanding when your responsibilities begin and knowing the full scope of the assets you’ll be managing. The third thing I’d like you to ask about is compensation.
Are you going to be paid? Maybe you're helping your mom, and the idea of charging her doesn't appeal to you. That's fine. But it's a decision you should make knowingly.
There’s a big difference between agreeing to help your mom pay a few bills and discovering that you're spending fifteen hours a week managing her financial affairs.
And if you're taking time away from your own job or family to do that work, you might feel differently about compensation. So ask what the document says. Does it authorize reasonable compensation? Does it specify a rate? Or, and I’ve seen this a lot, does the power of attorney specifically prohibit compensation?
And don't assume that whatever arrangement seems fair to you will be acceptable to everyone else in the family. If you're going to be compensated, make sure the arrangement is authorized, understood, and properly documented.
This next point isn't so much about what's written in the power of attorney. It's about what you do once you start serving as agent. And it's something I can't emphasize enough: keeping good records. Keep track of money coming in and money going out. Save receipts. Document significant decisions. If you reimburse yourself for an expense, document what the expense was and why it was appropriate.
And please, don't mix the principal's money with your own. Imagine you’re using your mom’s debit card to pay her bills. You stop at the grocery store to pick up a few things for her. And, while you're there, you pick up a few things for yourself and pay for everything together. It might be convenient but it’s bad practice, even if you think you’ll remember to reimburse your mom’s account later. Keep the records clean.
And before accepting the appointment, ask what accounting obligations the document imposes. Who can request an accounting? What records must you maintain? You’ll want a system that works and that you regularly update.
Next, let’s talk about the risk and liability you are exposed to for agreeing to serve. Does the document include protections for an agent who acts responsibly and in good faith? For example, does it include language limiting liability and providing indemnification for certain actions taken in good faith?
For example, if you're sued over a decision you made in good faith while serving as someone's agent under a power of attorney, an indemnification provision allows you to use that person's money to cover your legal defense.
Imagine you make a reasonable decision while managing Aunt Jane's investments. You consult her financial advisor, follow the applicable instructions and document what you did. But the market declines.
And now a family member is threatening to sue you. I'd want to know whether the power of attorney allows me to use Aunt Jane’s money to pay the legal fees and other expenses of defending myself against a claim arising from my good-faith service.
Before we move on, let's quickly recap what we've covered. Before agreeing to serve as someone's agent under a power of attorney, we want to understand when our responsibilities begin and make sure we have the information we'll need to do the job. Remember, I'll link to the Death Readiness Playbook worksheets in the show notes to help you get that information organized.
We also want to know whether we're entitled to compensation and what records we'll be expected to keep. And we want to understand what protections we have if we act responsibly and in good faith, but someone decides to challenge our decisions anyway.
That's a lot to consider before saying yes. But there's another question I’d like you to ask before accepting the job. What happens if you want to stop? Agreeing to serve today doesn't mean you'll be willing or able to continue serving five years from now. So next, let's talk about how you get out of the job once you've started.
Find the resignation provision in the power of attorney document. I want you to know how to stop serving before you even start. Maybe you're perfectly capable of helping your dad today but five years from now, your own health has changed. You've moved across the country, your job has become more demanding, or maybe the family situation has become so contentious that you no longer feel comfortable serving.
What happens then? Can you resign by giving written notice? Who needs to receive that notice? When does your resignation become effective? What are you required to do to transfer records and responsibilities to the next person? Is there a successor agent ready to step in? And will you be required to serve until a successor is available?
The answers depend on the document and applicable state law. Agreeing to help someone today shouldn't mean you assume that you'll be able to continue serving under every circumstance for the rest of their life.
And the last thing I’d like you to pay particular attention to before agreeing to serve is the authority to make gifts. I’d like you to actually read the gifting provision in the power of attorney. A standard gifting provision allows the agent to make gifts to family members and also to charities.
And while a gifting provision may be perfectly appropriate, that doesn't mean the person signing the document has thought through every situation in which you might use that authority.
So I'd ask some questions. Does your mom actually want you to have the authority to make gifts on her behalf? Does she want you to continue making the kinds of gifts she's made in the past? Are there certain people she wants you to be able to give money to? Are there limits on how much you can give? And are there circumstances in which she wouldn't want you making gifts at all?
Let's say you're serving as agent for your mom. Your brother calls and says, "Mom always intended to help me with the down payment on my house. Can you transfer $50,000 to me?"
Maybe that's true. And maybe the power of attorney gives you broad authority to make gifts. But that doesn't necessarily mean your mom would want you to give your brother $50,000 under these circumstances. And your brother's assurance that it's what Mom would have wanted doesn't relieve you of your fiduciary responsibilities.
That's why I'd want to have these conversations while Mom is still capable of telling me what she wants. And if she has particular wishes or restrictions, I'd want her to discuss with the drafting attorney whether those should be included in the power of attorney or documented separately.
Now, I want to tell you something about my own approach to these responsibilities. I'm serving as agent under my dad's power of attorney. And I'm serving as agent under my husband's power of attorney. That's it. I'm not volunteering to take on additional fiduciary responsibilities simply because someone trusts me, because I'm an attorney, or because I might be capable of doing the job. Being capable of doing something doesn't mean you have to agree to do it.
I have a family, a career, and my own responsibilities. And I get to decide how much additional responsibility I'm willing to accept. So do you.
That doesn't mean you shouldn't help people. And it certainly doesn't mean you shouldn't serve as agent for someone you love and trust. But I want you to make that decision with a realistic understanding of the job.
So what happens if you say no? Well, you're not the only option. As much as we like to think that if we don't do something, no one else will, we're generally not that indispensable. Even if the guilt trip makes it seem that way.
The principal might name another trusted family member or friend or hire a professional fiduciary. If the principal has already become incapacitated and no one is available to serve, it may be necessary to ask a court to appoint someone to manage their affairs.
The fact that someone needs help doesn't automatically mean you're the person who has to provide it. And I'd much rather see someone thoughtfully decline an appointment than accept a responsibility they don't have the time, resources, or willingness to fulfill.
And here's something you might not have considered. Just because an attorney prepared the documents doesn't mean that attorney represents you.
Let's say Aunt Jane asks you to serve as her agent under a power of attorney. She worked with an estate planning attorney to prepare the document. But that attorney represents Aunt Jane, not you.
That distinction matters. The attorney's job is to advise Aunt Jane and protect her interests. It's not to advise you about your personal responsibilities, potential liability, or whether you should agree to serve in the first place. And if you have questions about any of those things, you may need to hire your own attorney to help you understand what you're agreeing to. The bottom line is that being named in someone's estate planning documents doesn't mean you have an attorney looking out for your interests.
So, let's go back to that intersection in California. The woman behind me wanted me to move. She was honking and waving her arms. She was very frustrated. But I could see something she either couldn't see or didn't care about. There wasn't anywhere safe for me to go. And I wasn't going to move forward just because she wanted me to. That's what I want you to remember when someone asks you to serve as agent under their power of attorney.
You don't have to make the decision on the spot. You can ask questions, request information, ask for changes to the document, and consult with your own attorney. If you decide to serve, I want you to be prepared. I want you to understand your authority, have access to the information you need, know what protections are available, and have a plan for keeping records and eventually stepping away from the role, if needed.
I'll link to the free Death Readiness Playbook worksheets in the show notes, along with the printed Worksheets book, so you can start gathering the information you'll need if you're going to serve. Or, even better, you can start gathering the information someone will need if you ask that they serve.
Thanks for listening today.
This is Death Readiness, real, messy and yours to own. I’m Jill Mastroianni and I’m here to help you sort through it, especially when you don’t know where to start.
Hi, I'm April, Jill's daughter. Thanks for listening to The Death Readiness Podcast. While my mom is an attorney, she’s not your attorney. The Death Readiness Podcast is for educational and entertainment purposes only. It does not provide legal advice. For legal guidance tailored to your unique situation, consult with a licensed attorney in your state. To learn more about the services my mom offers, visit DeathReadiness.com.
