If you have been named someone’s agent or “attorney-in-fact” under a Michigan financial power of attorney, you likely understand that the principal (the person who executed the power of attorney) has put a lot of trust in your integrity and abilities. After all, they gave you authority in their estate plan over some or all of their assets and financial affairs. That’s not a step or decision they took lightly. Neither should you.
But while you may understand the importance and gravity of your role, you may not understand what that means as a practical matter. Here are five fundamental things to know about your role as an agent under a Michigan financial power of attorney:
1. You Must Act in the Principal’s Best Interest at All Times
In your role as an agent, you are a fiduciary. Being a fiduciary means that your position’s prime directive is to always act in the principal’s best interests when it comes to decisions and actions involving their assets. You are managing these assets for their benefit, not yours. Any decisions that could be seen as self-dealing or self-interested can land you in trouble and betray the trust that the principal placed in you.
2. You Must Act Carefully and Responsibly
Your fiduciary duties also include managing your principal’s assets with the utmost caution and responsibility. As an agent, you might be responsible for paying bills, overseeing bank accounts, making investments, providing for the principal’s necessities and well-being, and any other duties in the power of attorney. In all these activities, you are required to use common sense and good judgment, even more than you would with your own assets.
3. Keep the Principal’s Assets Separate
One of the biggest mistakes that an agent can make is comingling the assets and funds of the principal with your own or other assets. You must keep separate accounts, never deposit funds or property into an account in your name, avoid joint accounts, keep title to the principal’s property and funds in their name, and pay any of the principal’s expenses with their funds, not yours.
4. Keep Thorough Records
If the principal or others believe you have breached your fiduciary duties or acted nefariously, you must have thorough and organized records to prove them wrong. You should maintain records in such a manner that if anyone wanted a full picture of the assets and funds under your care, they could do so quickly and easily.
5. Don’t Be Afraid to Ask for Help
As trustworthy and competent as you may be, managing a complex portfolio of assets can be a complicated undertaking. Agents frequently involve professionals like lawyers, accountants, tax professionals, financial planners, and others to assist them in carrying out their fiduciary responsibilities. Make sure you do your research carefully before retaining any professional help, which can be paid for using the funds in your care.
Questions About Michigan Powers of Attorney? Contact Kreis Enderle Today
If you are interested in preparing a financial power of attorney for yourself or need guidance about how to fulfill your responsibilities as an agent, please contact one of Kreis Enderle’s estate planning attorneys today.