May 18, 2023
Accountability in Power of Attorney: What You Need to Know
In this episode of Berry’s Bites, Chris Berry answers the question: Power of Attorney, how are they held accountable?
0:20 Fiduciary Responsibility
1:06 Would you like to be the trustee?
1:29 Liability of a Power of Attorney
1:36 Who can hold a POA accountable?
2:08 Compensation for a trustee?
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Episode Transcript:
Power of attorney, how are they held accountable?
The first thing to understand is when you’re serving as a power of attorney for someone, you’re wearing this hat and you’re wearing the hat of what’s called a fiduciary. And this is going to be whether you’re a, a financial power of attorney. This is if you’re a trustee, if you’re a personal representative under a will.
With all of these roles, you owe a fiduciary responsibility to the person that has appointed by law. By accepting that role of power of attorney, you owe a duty to act on behalf of that person. By accepting that role of trustee, you owe a duty to act on behalf of that person by accepting the role as a person representative.
You are a duty to follow the terms of the will with the trust. You have to follow the terms of the trust. So by you signing and accepting that role, you are now a fiduciary. So you’re taking on responsibility. I see some families, they fight to say, Hey, I wanna be the trustee, or I wanna be the power of attorney.
And I look at it as I’d rather just be a beneficiary. I’d rather just sit there, sit back, not do anything and wait for my money. But yeah, a lot of families will fight to, I wanna be the trustee. Your personal representative, like all you’re doing is you’re taking on more responsibility, you’re taking on more work.
So just by signing that document, you are now a fiduciary. So you have civil and potential criminal liability. If you were to violate. And not act on behalf of the person. Now, who would hold you accountable? Like if any other beneficiaries see that you’re acting in bad faith or not following the terms of the power of attorney or the trust, then they could take you to court and they could take you both to court civilly as well as financially.
And if I’m not mistaken, you could be liable for, I think even trouble damages. So by you signing on, you’re accepting. That role, and then you’re accepting responsibility and liability as well. So maybe think twice before signing on, accepting as a power of attorney or signing on as a trustee. You’re accepting more responsibility and it could be for very little benefit.
I was meeting with a client today. And we talked about compensating the trustee or personal representative for their services. That’s also something that you can do to offset the fact that, all right, like let’s say you have three kids. One kid is a trustee, they have to get all the work done, and then the two others are beneficiaries.
Is that really fair? Maybe building in some compensation for the trustee that can balance things out a little bit.