Power of Attorney Obligations to Family Members

An agent (or attorney-in-fact) under a power of attorney is someone appointed and authorized by the principal to make decisions for them if and when they become incapacitated or are unavailable.

While agents must fulfill their legal responsibilities to the principal under the power of attorney, balancing that with their obligations to the principal’s family members is crucial. Their decisions can impact the principal’s family, especially if their views clash.

Learn more about an agent’s duties and their power of attorney obligations to family members, as well as tips for the principal in expressing their wishes and providing clear instructions.

Table of Contents

• Agent's Obligations
  • Clear Communication
  • Maintain Confidentiality
  • Fulfill Fiduciary Duties
  • Keep Records
• Guidance for the Principal
  • Hold Meetings
  • Draft the POA in Detail
  • Periodic Reviews
• Conclusion

Agent’s Obligations

When someone is appointed the agent under a power of attorney, they have certain legal obligations not only to the principal but also to the principal’s family members. These obligations vary depending on the type and scope of powers granted in the power of attorney.

Clear Communication

Unless the power of attorney document dictates otherwise, agents aren’t legally bound to disclose actions to the principal’s family. Nonetheless, clear communication promotes transparency and trust.

When a close family member or friend is the agent, engaging other family members in decisions becomes especially important so no one feels excluded or left out.

To maintain a positive rapport with the principal’s family, the agent should maintain transparency in situations like:

• Planning to sell a property owned by the principal where the principal’s family resides;
• Considering to sell high-value assets or sentimental items;
• Engaging third-party assistance, such as caregivers for the principal;
• Contemplating legal actions to uphold the principal’s wishes;
• Making critical medical choices, including consenting to particular procedures;
• Enacting provisions from a living will, such as preferences about resuscitation or intubation.

Agents should maintain empathy for the principal’s family members dealing with the potential deterioration and loss of their loved one and try to disclose as much information as is legally appropriate.

Maintain Confidentiality

While transparency can promote healthy, positive relationships with family members of the principal, the agent has a legal obligation to maintain confidentiality in some circumstances.

Some examples of what an agent should not disclose to anyone due to confidentiality include:

• Personal financial information that is not relevant to the family members’ well-being or decision-making process;
• Principal’s health and medical information that is protected by privacy rules (such as HIPAA);
• Legal matters or disputes that are confidential in nature;
• Any other sensitive information that could potentially harm the principal or their family members if disclosed.

Fulfill Fiduciary Duties

The agent has a fiduciary duty towards the principal, and that duty can extend to the principal’s family members. This means the agent must:

• Provide care, support and ensure the well-being of the principal’s family members;
• Act consistently in their best interests, being loyal, and making decisions with utmost competence;
• Manage the principal’s affairs diligently and transparently;
• Avoid conflicts of interest and always prioritize the principal’s welfare above all else.

On the other hand, if the principal does not want to provide care or support to their family members, their agent should not either, acting in line with the principal’s wishes.

Keep Records

By keeping thorough and detailed records of financial affairs and health care histories, an agent can demonstrate that they have acted in accordance with their obligations and in the best interests of the principal and their family members. These records can also be helpful in case of any disputes or legal matters that may arise.

Actions an agent should keep records of include:

• Financial transactions, such as withdrawals, cashed checks, invoices, and receipts;
• Purchase and sale of any property;
• Accounting of every dollar that goes into or out of the principal’s accounts;
• Medical decisions, including surgical procedures, treatments, and medications;
• End-of-life decisions;
• Any other pertinent choices made on the principal’s behalf.

Guidance for the Principal

While the agent under a power of attorney has obligations towards the principal’s family members, the person creating the power of attorney —  the principal —  should also try to minimize concerns and establish consensus among their family members.

Hold Meetings

One way for the principal to minimize misunderstandings and address concerns is to hold regular meetings involving both the agent and the family members. These meetings provide an opportunity for everyone to express their thoughts, ask questions, and discuss any issues or concerns that may arise.

For a medical power of attorney, meetings would ideally occur after doctors’ visits, with information fresh in the principal’s mind. In these meetings, discussions should cover:

• The principal’s latest health status and any potential risks or complications;
• The principal’s preferences for treatments and medications;
• Tasks the principal expects the agent to handle if incapacitation occurs.

For a financial power of attorney, meetings would ideally occur in tandem with meetings with accountants or financial advisors. Involved parties should discuss items including:

• The principal’s present financial status;
• Assets the agent can access and manage if the principal is incapacitated;
• Utilization of assets during the principal’s incapacitation;
• The agent’s specific financial responsibilities;
• Major forthcoming financial decisions, such as property sales or inheritances.
• To keep the meetings focused and productive, prepare a printed agenda that outlines the topics to be discussed.

Draft the POA in Detail

Just like any other legal document, the power of attorney document should be drafted in detail to minimize potential disputes and avoid ambiguities. For clarity, a financial or medical power of attorney should specify:

Medical POA

• The agent’s authority in specific medical situations and decision-making boundaries;
• The principal’s desired medical treatments, procedures, medications, and any DNR (do not resuscitate) orders;
• Any visitor restrictions during the principal’s medical treatment or hospital stays;
• The principal’s preferences for facilities or specific medical professionals;
• The principal’s views on experimental treatments or participation in clinical trials.

Financial POA

• The agent’s authority in certain financial situations and the extent of control over certain assets;
• Specific accounts the agent can access and the conditions for access;
• Guidance on the principal’s payments, account management, debt management, and investment strategies;
• Instructions on management, sale, or rental of real estate properties;
• Management of the principal’s tax obligations, filings, and any specific preferences for financial professionals or firms;
• Management of insurance policies, annuities, retirement plans, beneficiaries, and any desired changes;
• Comprehensive guidelines for regular financial reporting and audit.

By giving clear instructions in the power of attorney, the principal ensures their intentions are understood, setting a foundation for the agent’s duties and minimizing potential family conflicts.

Periodic Reviews

As life circumstances change, it is important for the principal to periodically review their power of attorney document, make any necessary updates or revisions, and inform their family members and agents. Certain life events may evoke the need to amend a power of attorney, including:

• Marriage or divorce;
• Birth or adoption of a child;
• Death of the designated agent or a named successor agent;
• Changes in financial status or acquisition of significant assets;
• Moving to a different state or country with differing legal requirements;
• Changes in the principal’s health condition;
• Establishment of a trust or changes to an existing one;
• Significant changes in tax laws or other regulations that impact the principal’s assets.

Conclusion

When an agent acts under a power of attorney, they not only bear responsibility for the principal but also uphold power of attorney obligations to family members. They often hold the principal’s life and the lives of their family members in their hands. The agent can only work best and eliminate family members’ concerns when the principal establishes clear communication and has a well-drafted power of attorney.

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