The responsibilities of a POA agent come down to a single standard: act in the principal’s interest, within the authority the document grants, and keep clean records of everything you do on their behalf. Everything else is detail attached to that core duty, and the detail matters because getting it wrong can mean being sued, removed, or criminally charged.
The Fiduciary Duty That Governs Everything
An agent under a power of attorney is a fiduciary. That is among the highest obligations the law places on any relationship, and it means acting in good faith, avoiding conflicts of interest, and never using the principal’s money or property for personal benefit. You cannot borrow the principal’s funds, lend them to anyone, or make decisions that favor yourself or a third party at the principal’s expense.
The Consumer Financial Protection Bureau’s guide for agents states the stakes directly: “As a fiduciary, you must be trustworthy, honest, and act in good faith. If you do not meet these standards, you could be removed as a fiduciary, sued, or have to repay money. It is even possible that the police or sheriff could investigate you and you could go to jail.”1Consumer Financial Protection Bureau. Help for Agents Under a Power of Attorney Agents who drain accounts or redirect assets routinely face charges for elder financial abuse, embezzlement, or forgery.
Know What the Document Actually Authorizes
Your authority is only whatever the power of attorney document says it is. A general power of attorney might cover banking, investments, real estate, and taxes. A limited one might cover a single transaction. Acting outside that scope is a breach of duty even when you believed you were helping.
Some powers require explicit authorization before you can use them. Making gifts from the principal’s assets is the most common. Even a broadly worded document does not let you give away the principal’s property unless the gift-giving power is spelled out. Where gift authority is granted in general terms without dollar limits, most states cap the amount at the annual federal gift tax exclusion. The same explicit-authorization requirement often applies to creating or modifying trusts, changing beneficiary designations on insurance or retirement accounts, and delegating authority to anyone else.
When you need to conduct business for the principal, expect to present the original or a certified copy of the document to banks, title companies, and brokerages. They will review it to confirm your authority before letting you transact.2Consumer Financial Protection Bureau. What Is a Power of Attorney (POA)?
Managing the Principal’s Money
A financial power of attorney typically covers day-to-day money management: paying bills, depositing checks, managing bank and investment accounts, filing insurance claims, and similar tasks. Approach every decision by asking whether a reasonably careful person would handle someone else’s finances this way.
Keep the principal’s money completely separate from your own. Never deposit their funds into a personal account, and never mix property. The CFPB warns agents: “Never mix Martina’s money or property with your own or someone else’s. Mixing money or property makes it unclear who owns what.”1Consumer Financial Protection Bureau. Help for Agents Under a Power of Attorney Assets stay in the principal’s name, in separate accounts. That rule is not negotiable.
When signing checks or documents for the principal, make the relationship clear. The correct format looks like “Jane Smith, as agent for John Smith.” Signing the principal’s name alone, without identifying your role, creates confusion and can look like forgery.
You also have a duty to preserve the principal’s estate plan when you know what it is. Avoid financial moves that would unintentionally disinherit beneficiaries, trigger unnecessary taxes, or undermine the principal’s eligibility for benefits. You don’t need to be an estate-planning expert, but you should avoid major restructuring of assets without good reason.
Making Healthcare Decisions
A healthcare power of attorney gives you authority over medical decisions when the principal cannot communicate their own wishes. This authority is separate from a financial power of attorney and governed by its own document.
Your job is to make the decisions the principal would have made. If they left written instructions through an advance directive or living will, follow them. If their wishes are not documented, decide based on what you know about their values, preferences, and prior conversations about medical care. When even those guideposts are unavailable, act in the principal’s best medical interest.
HIPAA gives a healthcare agent the same right to the principal’s medical records as the principal would have. The Department of Health and Human Services confirms that a person authorized under a healthcare power of attorney qualifies as a “personal representative” under HIPAA and can request and review complete medical records, including mental health information.3U.S. Department of Health and Human Services. Does Having a Health Care Power of Attorney Allow Access to the Patient’s Medical and Mental Health Records Under HIPAA? One exception: a healthcare provider may refuse to treat you as a personal representative if the provider reasonably believes the principal has been or may be subjected to abuse or neglect by you.4U.S. Department of Health and Human Services. Can a Health Care Power of Attorney Obtain Access to the Individual’s Medical Record
Keeping Records
Detailed record-keeping is not optional. Track every receipt, disbursement, and significant action taken on the principal’s behalf. Keep a running log of bills paid, checks deposited, investment transactions, property decisions, and conversations with medical providers or financial institutions.
Good records protect both the principal and you. If a family member, a court, or adult protective services questions your handling of affairs, those records are your primary defense. The CFPB advises paying expenses with cash as little as possible and minimizing ATM withdrawals, since cash transactions are hard to document after the fact.1Consumer Financial Protection Bureau. Help for Agents Under a Power of Attorney
In most states you don’t have to proactively disclose records unless someone authorized asks. But when a request comes from the principal, a court-appointed guardian, the personal representative of the estate after the principal’s death, or adult protective services, you must comply. Failing to produce records can lead to a court order compelling disclosure and possible sanctions.
What a POA Agent Cannot Do
Certain actions fall outside the authority of any power of attorney, no matter how broadly it is written:
- Change or create a will. A power of attorney cannot be used to write, modify, or revoke the principal’s will. Wills require the testator’s own intent and signature.
- Act after the principal’s death. A power of attorney terminates the moment the principal dies. You have no authority to make decisions, access accounts, or conduct transactions after that. Those responsibilities pass to the executor or personal representative named in the will or appointed by a court.
- Vote or marry on behalf of the principal. These are personal rights that cannot be delegated.
- Transfer your agent role to someone else. Unless the document specifically allows delegation, you cannot hand off authority to another person.
Acting outside these boundaries risks personal liability and, depending on the circumstances, criminal prosecution. The line between “I thought it would help” and “that was unauthorized” is thinner than people expect, which is why reading the document carefully before acting matters so much.
Dealing With the IRS
A financial power of attorney often authorizes you to file tax returns and manage tax obligations for the principal. But when it comes to dealing directly with the IRS, the general document alone may not be enough.
The IRS uses its own form, Form 2848, to authorize someone to represent a taxpayer in federal tax matters. This form allows the representative to receive confidential tax information, sign agreements, and communicate with the IRS on the taxpayer’s behalf.5Internal Revenue Service. About Form 2848, Power of Attorney and Declaration of Representative The person authorized through Form 2848 must be eligible to practice before the IRS. Eligible representatives include attorneys, CPAs, enrolled agents, and in limited circumstances family members or unenrolled tax return preparers. The form can be submitted online.
One important limit: a representative authorized through Form 2848 cannot endorse or negotiate tax refund checks issued by the government. If the principal is expecting a refund, make sure it goes to direct deposit in the principal’s account rather than a paper check to you.
Compensation and Expenses
Serving as an agent is often unpaid, especially for family members. You are generally entitled to reimbursement for out-of-pocket expenses incurred while managing the principal’s affairs, such as mileage, postage, and filing fees.
Whether you can be paid for your time depends on what the power of attorney document says and what state law allows. The Uniform Power of Attorney Act, adopted in roughly 30 states and the District of Columbia, provides that an agent is entitled to “reimbursement of expenses reasonably incurred on behalf of the principal and to reasonable compensation for services rendered as agent” unless the document says otherwise. If the document is silent on compensation, proceed cautiously. Paying yourself from the principal’s accounts without clear authorization is exactly the kind of self-dealing that triggers fiduciary liability.1Consumer Financial Protection Bureau. Help for Agents Under a Power of Attorney
If compensation is authorized, document every hour worked and every task performed. “Reasonable” usually means a rate consistent with what a professional would charge for similar services in the same area. Inflated fees or a percentage of assets can lead to removal and legal claims.
When Your Authority Ends
A power of attorney is not permanent. Your authority terminates under any of these circumstances:
- The principal dies. This is the rule people most often misunderstand. Your authority vanishes at death. Any transactions after that are unauthorized, and you can be held personally liable for them.
- The principal revokes it. As long as they are mentally competent, they can revoke the power of attorney at any time, usually by written notice to you and to any institutions holding a copy.
- A court terminates it. A judge can revoke the document on evidence that you are acting improperly or that the document is no longer valid.
- You resign. If you no longer want to serve, step down in writing and make sure the principal or their other representatives know, so affairs are not left unmanaged.
- The purpose is fulfilled. A limited power of attorney granted for a specific transaction ends once that transaction is complete.
After termination for any reason, notify financial institutions, healthcare providers, and anyone else who relied on the document. Holding onto authority you no longer have is how agents accidentally cross into unauthorized action.
When a Bank Refuses To Accept the Document
Presenting a valid power of attorney to a bank and being told it won’t be accepted happens more often than it should. Institutions sometimes refuse because the document is old, uses unfamiliar formatting, or runs into a cautious compliance department.
Many states have enacted laws requiring financial institutions to accept valid powers of attorney within a set number of business days and imposing liability on institutions that refuse without a legitimate reason. If you hit resistance, ask for the specific reason in writing, offer a signed certification that the power of attorney is still in effect, and if needed have an attorney contact the institution. Most refusals resolve once the institution’s legal department reviews the document. If the refusal persists without a valid legal basis, the institution may face court-ordered compliance and attorneys’ fees.