Gifts and Power of Attorney
Power of attorney is an agreement in which one person (the “principal”) authorizes another (the “attorney-in-fact”) to make certain decisions on his or her behalf. It does not mean that the person granting power of attorney has given up their right to make their own decisions; it simply means that the attorney-in-fact can act on their behalf. The attorney-in-fact must defer to the decisions of the principal, as long as the principal is competent to make decisions. The principal can also revoke power of attorney at any time, for any reason.
Attorneys in fact have the power to spend the money of the principal, usually to cover pre-existing obligations, such as bills and debts.
It is illegal for the attorney-in-fact to mix the funds of the principal with his or her own money, and to make unauthorized gifts on behalf of the principal. Also, as a fiduciary, the attorney-in-fact must always act in the principal’s best interest. “Donating” the principal’s money to himself, or to a pet cause, clearly breaches this duty.
If the attorney-in-fact breaches his or her fiduciary duty to act in the best interests of the principal, the principal can sue for this violation, and recover significant damages. The principal can (and in such cases, should) terminate the attorney-in-fact, preventing them from doing any more damage.
Consult a Lawyer - Present Your Case Now!
Last Modified: 06-29-2009 03:38 PM PDT
Did you find this article informative?