After you've named your attorney-in-fact and decided which financial powers to grant, you have just a few more choices to make about how your attorney-in-fact will carry out the job.
You can require the attorney-in-fact to issue reports to people you name. Unless you require it, your attorney-in-fact doesn't have to report to anyone about your finances. In most cases, that arrangement is fine.
But in some circumstances, you may want to require reports. For example, if the attorney-in-fact is in charge of your business, investors may need to receive periodic financial statements, audited or reviewed by an accountant. Or perhaps you want to defuse a potentially explosive personal conflict by reassuring suspicious family members that they'll receive regular reports about your finances. We allow you to require quarterly or semiannual reports to people whom you name. (If you live in New York, this works a little differently. See the note just below.)
EXAMPLE: Theodore, who is ill, appoints his son, Jason, as his attorney-in-fact for finances. Theodore's two other children, Nancy and Ed, live out of state and aren't on the best of terms with Jason. To prevent conflict between his children over Jason's handling of Theodore's finances, Theodore decides to require Jason to give Nancy and Ed semiannual reports of all financial transactions he engages in as attorney-in-fact.
The idea of making your attorney-in-fact accountable to people may appeal to you. But before you enter a long list of names of people to whom your attorney-in-fact must make reports, ask yourself whether or not these reports are truly necessary.
One of the most important reasons for making a durable power of attorney is to give control of your finances to someone you trust completely, bypassing the court system. One big advantage of this tactic is that you spare your attorney-in-fact the hassle and expense of preparing reports and accountings for a court.
If you want someone to keep tabs on your attorney-in-fact, think again about whether you truly trust the person you've named.
WillMaker's durable power of attorney requires that all reports include income received by you and expenses incurred. If you want other details included, be certain your attorney-in-fact knows what they are.
Unless the timing of reports is governed by a business agreement or other legally binding document, you are free to require quarterly or semiannual reports. Weigh the need for the reports against the inconvenience to your attorney-in-fact and the expense of preparing the reports. If you have a very anxious relative, for example, you may want to authorize quarterly reports. Making these reports could be less hassle for your attorney-in-fact than dealing with constant interference from your family members. If the situation is not so tense, semiannual reports will probably do fine.
If your attorney-in-fact resigns from the job, the alternate you named will take over. But if there is no alternate available, or if your attorney-in-fact is only temporarily unavailable, the attorney-in-fact will need to find another person to do the job.
If you allow it, your attorney-in-fact can turn over all or part of the attorney-in-fact's duties to someone else in this situation. This reassignment of duties is called delegation.
An attorney-in-fact with the power to delegate tasks is free to turn over any or all of the job to a competent third person. This person may step in temporarily or permanently, depending on the situation.
EXAMPLE 1: Caroline names her son, Eugene, as her attorney-in-fact for finances, effective immediately. She names a close friend, Nicole, as alternate attorney-in-fact. A year later, Eugene goes on vacation for three weeks, so he delegates his authority over Caroline's bank accounts to Nicole until he returns.
EXAMPLE 2: Anthony names his wife, Rosa, as his attorney-in-fact; his son Michael is the alternate attorney-in-fact. When Rosa declines to serve because of her own poor health, Michael takes over but soon finds that other responsibilities make it impossible to continue. He delegates all his authority to his sister, Theresa.
Your power of attorney will print out with a form that your attorney-in-fact can use to delegate authority to someone else. The new representative will use the signed form, along with your power of attorney document, to act on your behalf.
Delegation becomes more complicated if you've named more than one attorney-in-fact.
Attorneys who must act jointly. If you require your attorneys-in-fact to act together in all that they do, it's a good idea to give them the power to delegate responsibilities. This is to avoid trouble in the event that one or more of your attorneys-in-fact becomes unable to act on your behalf. If this happens, the unavailable attorney-in-fact can use the delegation form to give his or her authority to the remaining attorneys-in-fact, temporarily or permanently. Your remaining attorneys-in-fact can use the delegation form to prove that they are permitted to act alone. If you don't grant the delegation power, an attorney-in-fact who will be unavailable will have to execute an affidavit —a sworn, notarized statement—that he or she cannot act for you. (If one of your attorneys-in-fact permanently resigns, he or she can sign a resignation form; the remaining attorneys-in-fact can use that form to prove their authority.)
In the unlikely event that all of your attorneys-in-fact will be temporarily unavailable, they can get together to choose a person to take over.
Attorneys-in-fact who may act separately. If you've authorized your attorneys-in-fact to act independently, allowing them to delegate tasks is probably not necessary or wise. The main reason for allowing delegation is to ensure that someone will always be on hand to take care of your finances. In your situation, if just one of your attorneys-in-fact is temporarily unable to act on your behalf, the others may simply act alone, without any special documents or fuss. And you can name up to two alternate attorneys-in-fact to take over if all of your attorneys-in-fact must step down.
Allowing delegation in your situation could, in fact, create much unnecessary confusion. Because your attorneys-in-fact may act independently, they could each delegate tasks to individuals that they choose—without consulting each other. When it comes to your finances, it's better not to open the door to that sort of chaos.
As discussed, your attorney-in-fact must always act in your best interests, must act honestly and prudently when managing your property and must keep good records. However, you may want to allow your attorney-in-fact to deviate from some standard legal duties, including:
In most states, an attorney-in-fact has no right to engage in activities from which he or she personally stands to benefit. Such activities, which create conflicts of interest between the principal and attorney-in-fact, are called self-dealing. The attorney-in-fact's motive is irrelevant. If the transaction is challenged in court, it is presumed fraudulent until the attorney-in-fact proves otherwise.
EXAMPLE: David is the attorney-in-fact for his elderly mother, Irene. After Irene's failing eyesight makes it impossible for her to drive, David decides to buy her car from her. He looks up the car's fair market value to make sure he is paying a fair amount, writes a check and deposits it in Irene's bank account.
This transaction is forbidden, even though David isn't cheating Irene, unless Irene's power of attorney specifically allows David to benefit from his management of her property and finances.
The ban on self-dealing is intended to protect you; after all, the attorney-in-fact is supposed to be acting on your behalf. However, it's quite sensible to give the attorney-in-fact permission to self-deal if the attorney-in-fact is your spouse, a close family member, a business partner, or another person whose finances are already intertwined with yours. We allow you to grant this permission in your power of attorney document.
EXAMPLE: Maurice wants Alice, his best friend, to serve as his attorney-in-fact. They have been involved in many real estate transactions together—including several current projects. Maurice doesn't want to risk disrupting these projects or curtailing Alice's ability to do business, so he specifically states in his durable power of attorney that Alice may benefit from transactions she undertakes on Maurice's behalf as his attorney-in-fact.
When you grant financial powers to your attorney-in-fact, you may allow your attorney-in-fact to receive gifts of your property. If you explicitly grant the gift-making power in your document, receiving permitted gifts is not considered a conflict of interest. In other words, it's perfectly fine to forbid your attorney-in-fact from using your power of attorney document for personal benefit while also allowing him or her to receive some of your property as a gift.
An attorney-in-fact is never allowed to mix or commingle your funds with his or her own unless the power of attorney specifically authorizes it. You will probably want to grant that authority if you appoint your spouse or immediate family member as attorney-in-fact and your finances are already thoroughly mixed together in joint bank or security accounts.
EXAMPLE: Jim and Eduardo have been living together for 25 years. They have a joint checking account and share all basic living expenses. Each names the other as his attorney-in-fact. To avoid any possible problems, Jim and Eduardo both include, in their powers of attorney, specific provisions that allow commingling of funds.