What an Agent Owes the Person They Act For
Somebody handed a power of attorney generally reads the powers and not the obligations. The obligations are the more important half. An agent acts for the maker and not for themselves, keeps the money separate, keeps records, and can be made to account for every dollar.
The rule in short
An attorney-in-fact owes fiduciary duties: to act in the maker's interest rather than their own, to keep the maker's property separate from their own, to keep records adequate to account for what was done, to act within the authority granted, and to avoid conflicts. Breaches are frequently committed innocently, by relatives who mix funds or make gifts they assumed were expected. The exposure is personal and can extend well beyond repayment.
The overwhelming majority of agents are honest, and a substantial minority of them are technically in breach of their duties. Those two facts sit together comfortably, because the duties are unfamiliar and nobody explains them at the point of signature.
The core duties
Loyalty. Acting in the maker's interest rather than the agent's own, which is the principle every other obligation follows from.
Care. Managing the maker's affairs with the attention a prudent person would apply to their own, which is a real standard rather than a platitude.
Separation of property. Keeping the maker's money and assets distinct from the agent's, in the maker's own accounts, and never mixed.
Record keeping. Adequate to account for what was received and spent, since an agent may be required to explain everything they did.
And staying within the authority. Since acts beyond what the document confers are unauthorized however sensible they were, per what a power of attorney does.
The breaches that happen innocently
Mixing funds. Moving a parent's money into the agent's account for convenience, which is a breach even where every dollar is spent properly.
Continuing family gifting. Because it is what the parent always did, without the document authorizing gifts at all.
Paying oneself. For time, expenses or care provided, without authority in the document or any contemporaneous record.
Buying assets from the maker. Even at a fair price, since self-dealing is prohibited without express authorization.
And keeping nothing. Which is not itself a misappropriation and makes every other question impossible to answer later.
| Action | Permitted |
|---|---|
| Paying the maker's bills from the maker's account | Yes |
| Moving the maker's money into the agent's account | No |
| Making gifts to family | Only if expressly authorized |
| Paying the agent for their time | Only if authorized |
| Buying the maker's car at market value | Only if authorized |
What good practice looks like
Separate accounts, clearly labelled. In the maker's name, with the agent signing as attorney-in-fact rather than in their own name.
A simple running record. Date, amount, purpose, and a receipt where one exists, which takes minutes a week and answers everything later.
Written notes on unusual items. Anything large, anything to a family member, and anything a stranger might query, explained at the time rather than afterward.
Voluntary accounting. To a sibling or a named third party periodically, which protects the agent as much as anybody else.
And asking before acting. Where the document is unclear, since advice beforehand is far cheaper than a dispute afterward.
A mother gave each grandchild a sum every birthday for twenty years. Her daughter, now acting under a power of attorney, continues it, because stopping would be strange and everybody knows it is what her mother would want. Unless the document authorizes gifts, those payments are unauthorized, they are recoverable from the daughter personally, and they will look very different in a dispute between siblings than they did at the time.
What happens when it goes wrong
The agent may be required to account. By the maker, by a court, or by whoever administers the estate after death.
Repayment is personal. Sums applied improperly are recoverable from the agent, whatever their circumstances and whatever the money was spent on.
Other consequences may follow. Depending on the conduct, since misappropriation from a vulnerable adult is treated seriously, per reporting suspected exploitation.
Family relationships rarely survive it. Which is the cost families feel most, and which is frequently disproportionate to the sums involved.
And the absence of records decides it. Since an agent who cannot explain a transaction is generally assumed against, whatever actually happened.
Protecting an agent who is doing it properly
Records are the protection. An agent with a contemporaneous file answers accusations in an afternoon; one without spends a year on it.
Transparency prevents suspicion. Siblings who receive a summary twice a year rarely become the siblings who bring a claim.
Authority should be explicit. Gifts, payment and any dealing between the agent and the maker, addressed in the document rather than assumed.
Advice at the outset helps. An hour explaining the duties at the point of appointment prevents most of what goes wrong afterward.
And declining is legitimate. Somebody who cannot do this properly should say so, on the selection points in choosing an agent well.
The mismatch at the heart of this is that the role feels domestic and is legally formal. An adult child paying a parent's electricity bill does not feel like a fiduciary, and is one.
That mismatch is why breaches are so often innocent. Nobody mixing funds for convenience believes they are doing anything wrong, and the rule against it exists precisely because the alternative makes every later question unanswerable.
Record keeping is the whole of the practical defense. It takes a few minutes a week, it costs nothing, and it converts a potentially ruinous dispute into a folder that answers itself.
Gifting deserves particular caution, because it is the breach families walk into with the best intentions. The document either authorizes it or it does not, and continuing a long-standing practice is not authorization.
Payment for an agent's time is a legitimate thing to provide for and a dangerous thing to assume. Where the work will be substantial, it belongs in the document at the outset.
Voluntary transparency toward siblings protects the agent more than anybody. Most claims of this kind are brought by relatives who felt excluded rather than by relatives who found evidence.
Where an agent is uncertain, asking before acting is almost always cheap and almost always worth it. An hour of advice at the start prevents the great majority of what goes wrong.
And declining the role is entirely respectable. Somebody who knows they will not keep records, or who cannot separate their own finances from anybody else's, does the maker a service by saying so before the document is signed.
It is worth putting the risk in proportion. The overwhelming majority of family agents do this work for years, honestly and at considerable personal cost, and are never questioned about any of it. The purpose of setting out the duties is not to suggest otherwise but to protect those people, because the ones who get into difficulty are almost never dishonest.
They are the ones who moved money into their own account to make paying the bills easier, kept nothing, and then found themselves explaining four years of transactions to a sibling who had not been involved and wanted to know where the house money went. Every part of that is avoidable with a separate account and a notebook.
The other thing worth saying is that these duties do not end quietly. They can be examined after the maker's death, by an executor or by beneficiaries with an interest in what happened to the estate, and by then the person best able to explain any of it is no longer available to help.
Points to carry away
- An agent acts for the maker, never for themselves.
- Funds must be kept separate and never mixed.
- Records adequate to account for everything are required.
- Gifts generally require express authority in the document.
- The exposure for breach is personal.
Questions readers ask
May an agent make gifts from the maker's money?
Only where the document expressly authorizes it, and even then only within its terms. This is the most common innocent breach in the whole area: an adult child continues a parent's long-standing practice of giving money to grandchildren at Christmas, assuming it is what the parent would have wanted, without noticing that the document says nothing about gifts. A general power is frequently read as excluding gifting altogether, and gifts made without authority can have to be repaid personally by the agent.
What does keeping records actually require?
Enough to explain every transaction to somebody who was not there: statements, receipts, a note of the purpose of anything unusual, and a running record of income and expenditure. It does not require bookkeeping software or professional accounts. What it does require is that an agent asked in three years' time why four thousand dollars left the account in March can answer with a document rather than a recollection. Agents who keep nothing are the ones who lose disputes they would otherwise have won.
Can an agent be paid?
Where the document permits it, and otherwise generally not without agreement. Many family agents take nothing, which is admirable and occasionally unsustainable over years of substantial work. Where payment is intended, it should be authorized in the document, at a defined or reasonable rate, and recorded transparently. What causes real difficulty is an agent who pays themselves without authority, or retrospectively, which looks identical to misappropriation whatever the underlying merits.
Sources
- Legal Information Institute — Fiduciary Dutylaw.cornell.edu
- Legal Information Institute — Power of Attorneylaw.cornell.edu
- Legal Information Institute — Agencylaw.cornell.edu
- Legal Information Institute — Conflict of Interestlaw.cornell.edu
- Legal Information Institute — Conversionlaw.cornell.edu
- Legal Information Institute — Accountinglaw.cornell.edu
Silverline Legal Notes is a publication, not a law firm. This article states general rules and cites its sources; it is not advice about any particular case, and the law differs by state and changes over time.
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