I often hear people say they need to do "their will" when they refer to estate planning. Of course estate planning involves making a will, and most people see the will as the most important aspect of estate planning. Choosing to establish a power of attorney, however, may be the most important decision that a person makes when creating their estate plan. The person who is giving the power of attorney is known as the principal. The person to whom the power of attorney is given is referred to as the agent. Although the law has many provisions to protect individuals from unscrupulous agents, the damage an untrustworthy agent can do may be difficult or impossible to fix, and it directly affects what is left when a person passes away that can be given to beneficiaries under their will.
The duties Pennsylvania's Probate, Estates and Fiduciaries Code places on an agent is to act as a fiduciary, or a person who must act with a high standard of care for the benefit of another, to the principal. What this specifically means is that the agent must:
1. Act for the benefit of the principal;
2. Keep the agent's money and other assets separate from the principal's;
3. Exercise reasonable caution and prudence when acting on behalf of the principal; and
4. Keep accurate records and receipts of deposits, withdrawals and deposits.
Choosing the right agent who will dutifully follow the law is critically important because powers of attorney in Pennsylvania are generally durable, meaning they continue to have effect when the principal becomes incapacitated or disabled. Therefore, your agent must act for your benefit in handling your financial affairs when you are no longer able. Your agent will have full access to your bank accounts, stocks and other property.Continue Reading...