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On December 21, 2011, Ohio adopted the Uniform Power of Attorney Act (“UPOAA”), and this law became effective on March 23, 2012. An important part of estate planning is anticipating the possibility that you could become incompetent or otherwise unable to handle your financial affairs. A Power of Attorney for Property is a legal document in which you designate an agent to handle your financial affairs. An important part of the new law was to develop standards for agent conduct and liability when using a power of attorney. The following are excerpts from the new law concerning an agent’s duties and potential liability for misuse.
Agent’s Duties
When authority is granted to an agent under a power of attorney, a special legal relationship is created between the agent and the principal. This relationship imposes legal duties on the agent that continue until the agent resigns or the power of attorney is terminated or revoked. The agent must do what the principal reasonably expects to be done with the principal’s property. If those expectations are unknown, the agent is to act in the principal’s best interest, act in good faith, do nothing beyond the authority granted in the power of attorney, attempt to preserve the principal’s estate plan, and disclose the identity of the agent whenever acting for the principal by writing or printing the name of the principal and signing your own name as Agent. In addition, the agent must also act loyally for the principal’s benefit, avoid conflicts of interest, act with care, competence, and diligence, keep a record of all receipts, disbursements, and transactions made on behalf of the principal, and cooperate with any person that has authority to make healthcare decisions for the principal. All of these items must be done in the principal’s best interest.
Termination of Agent’s Authority
An agent must stop acting on behalf of the principal if the agent learns of any event that terminates the power of attorney or the authority under the power of attorney. Events that terminate a power of attorney or the authority to act under a power of attorney include: (1) death of the principal; (2) the principal’s revocation of the power of attorney or the agent’s authority; (3) the occurrence of a termination event stated in the power of attorney; (4) the purpose of the power of attorney is fully accomplished; or (5) if the agent is married to the principal, legal action is filed with a court to end the marriage.
Liability of Agent
If the agent violates the Uniform Power of Attorney Act or acts outside the authority granted, the agent may be liable for any damages caused by the violation. If you are acting as an agent for a principal and if there is anything about the power of attorney or your duties that you do not understand, you should seek legal advice.
NOTE: This general summary of the law should not be used to solve individual problems since slight changes in the fact situation may require a material variance in the applicable legal advice.
James F. Contini II, Esq.
Certified Specialist in Estate Planning, Trust & Probate Law by the OSBA
Krugliak, Wilkins, Griffiths & Dougherty Co., LPA
158 North Broadway
New Philadelphia, Ohio 44663
Phone: 330-364-3472
Fax: 330-602-3187
Email: jcontini@www.kwgd.com