Q. My brother-in-law wants to appoint me as his agent under his Power Of Attorney to handle his money and other affairs in the event of his incapacity. If I accept the appointment, are there any rules that I should observe?
A. Yes, and while it may be an honor to be asked to serve, there are definite guidelines you should follow when performing your duties. In the eyes of the law, you will be considered a fiduciary, and as such you will have the highest duty to act in your brother’s best interest. Here are some rules you should observe when handling your duties:
(1) Act Only in Your Brother’s Best Interest: this means that you must make decisions and take actions based upon what is best for your brother and not what is best for you or anyone else. Example: let’s suppose your brother’s grandson could use some help with college tuition and you would like to use some of your brother’s money to make a gift to his grandson for that purpose. Under fiduciary principles, you cannot do so unless the power of attorney (“POA”) document expressly authorizes this action. Remember, you cannot make gifts of your brother’s money, even to his own family members, unless the power to do so is contained in the POA, a rule that often comes as a surprise to many persons in your position.
(2) Manage Your Brother’s Money Carefully: you can pay bills, oversee bank accounts and pay for things that your brother needs, but always use good judgment and common sense. As a fiduciary, you must be even more careful with your brother’s money than you might be with your own. Pay bills on time and invest his money where it will be safe.
(3) Keep His Money and Property Separate from Your Own: keep your brother’s money in a bank account in his own name and do not commingle his funds with yours. When you sign checks or other documents you should do so in a special way. Let’s suppose your brother’s name is John Doe and you are Bruce Smith. You should then sign his name as follows: “John Doe, by Bruce Smith, his Attorney in Fact.” Never sign just “John Doe”. The fact you are acting as a fiduciary should always be clear whenever you sign for him.
(4) Keep Good Records: keep a detailed list of everything that you receive or spend on behalf of your brother, avoid paying in cash and keep receipts for even small expenses. Someday you may need to render an accounting to one of his heirs and/or possibly to the court if a dispute arises about the manner in which you have managed his money.
The above rules apply generally to all situations where someone else has been appointed to handle someone else’s money or oversee his affairs. In addition, actions by court-appointed fiduciaries, such as executors and conservators, often also require court approval. In your case, by following the above rules and using good judgment and common sense you can serve your brother well and avoid problems for yourself.