Duties of an Attorney Appointed under a General Enduring Power of Attorney
This executive summary explains the duties of an attorney appointed under a general enduring power of attorney. Attorneys should be aware that the laws relating to enduring powers of attorney are expected to change within the next 12 to 18 months.
The changes will likely expand upon the duties of the attorney, and may provide for more supervision of the attorney’s actions. This information does not replace the need for legal advice on specific situations which may arise for an attorney.
An enduring power of attorney is a special kind of power of attorney which “endures”, that is, continues to be effective, during any subsequent mental incapacity of the donor. It is different from a power of attorney that you may obtain from a bank, which is specific to that bank and may not continue after the mental incapacity of the donor. You should note as well that all powers of attorney can be revoked by the donor at any time, provided the donor is capacitated, and that a power of attorney dies when the donor dies.
An enduring general power of attorney gives full authority to make decisions about legal and financial matters, subject to any particular provisions in the document and some legal limitations. An enduring power of attorney cannot give authority to make decisions about health care or personal care matters. Under current laws, only a representative appointed by you under a representation agreement (or a guardian appointed by the court) can make such decisions.
Generally, a power of attorney creates an agency relationship between the principal (the donor) and the agent (the attorney). As an agent, the attorney is directed by the donor and should not take any actions contrary to those directions. The donor does not relinquish the right to make decisions, and can continue to make decisions concurrently with the attorney while the donor has capacity. The donor can require the attorney to account for his or her actions. If the donor is incapacitated, the Public Guardian and Trustee can require an accounting. After the donor’s death, his or her executor can also require an accounting.
Thus, all attorneys have the following duties: a duty to account; a duty to keep the donor’s property separate from his own; a duty to act prudently; and a duty not to place himself or herself in a conflict of interest with the donor.
With an enduring power of attorney, the incapacity of the donor can often prevent the donor from directing the attorney, making concurrent decisions, and requiring an accounting. Because of this lack of control, the law treats an attorney acting while the donor is incapacitated as a fiduciary for the donor. In other words, the law treats the attorney as a trustee of the donor’s property, and requires the utmost good faith from the attorney in all actions taken by the attorney on behalf of the donor. When in any doubt about his or her duties, the attorney should not hesitate to seek legal advice, an expense properly paid by the donor’s estate.
An attorney should, generally speaking, not “alienate” the donor’s property by gifting or transfers to third parties (including transferring assets into joint ownership), even if those third parties may eventually receive the property after the death of the donor under the terms of the donor’s will. An attorney may, however, make such gifts or other transfers if the terms of the enduring power of attorney permit them. The attorney should obtain legal advice before making such gifts or transfers.
A transfer of the donor’s property may also be undertaken if it is part of an estate plan which will benefit the donor, and the donor has the ability to recover the property at any time. An example of this kind of arrangement is an alter ego trust. Note, however, that an attorney cannot make, revoke or modify the donor’s will. Again, legal advice should be sought before undertaking any estate planning on behalf of the donor.
It is essential for an attorney to review the terms of the donor’s will if the donor is incapacitated, to ensure that the testamentary intentions of the donor are not frustrated by any actions of the attorney. (For example, the attorney should avoid the sale of property that is specifically bequeathed in the will.)
Where the donor has also appointed someone to act as a representative to make personal and health care decisions for the donor, it is recommended that an attorney consult with that representative on the needs of the donor.
The responsibilities of an attorney can be simple or onerous, but in either case, they are undertaken on a volunteer basis. In other words, the attorney is not entitled to compensation for carrying out his or her duties, unless the enduring power of attorney or other supporting document specifically provides for such remuneration. An attorney is, however, entitled to be reimbursed for all reasonably incurred expenses in carrying out his or her duties.
An attorney should never forget that his or her appointment under an enduring power of attorney is ultimately an expression of trust by the donor in the attorney. No steps should ever be taken that would be considered by the donor as a breach of that trust.