Maybe you were informed ahead of time or maybe you found out when you were first called upon to act. In any event, someone (a parent, a sibling, a friend, a neighbor) named you as their agent or attorney-in-fact under a Wisconsin power of attorney for finances. Now what?
What Are Your Rights and Responsibilities? Read the document by which you were appointed.
- Is the document valid? 244.06. The principal (the person who appointed you as agent) must sign the power of attorney or another individual, in the principal’s “conscious presence” and directed by the principal, must sign the principal’s name on the power of attorney. The principal’s signature does not have to be witnessed or acknowledged by a notary public. However, it is best practice to sign in the presence of a notary public for two reasons. First, it creates a presumption that the signature is genuine. 244.05. Second, an acknowledged signature is required if the power of attorney will be recorded by the agent in conjunction with the execution of real estate documents on behalf of the principal.
- What law governs? The meaning and effect of a power of attorney is determined by the law of the state indicated in the power of attorney and, in the absence of such an indication, by the law of the state in which the power of attorney was executed. 244.07.
- When is your appointment effective? Is your appointment effective immediately or upon the occurrence of a later event, such as a written notice from the principal or a determination of the principal’s incapacity? Does your authority to act cease if the principal becomes incapacitated or does it continue despite the incapacity? If it continues, your power is said to be “durable;” hence the term durable power of attorney. 244.04.
Review Chapter 244 of the Wisconsin Statutes. (See the link below in footnote 1.) In most cases, that’s where you will find answers to questions about your authority and responsibilities that are not recited in the power of attorney document. Here’s another reason to familiarize yourself with Chapter 244: that’s what everyone else will be reading if there is any question about your performance as agent.
Do You Accept Your Appointment? You may decline to serve as agent simply by not acting. However, you will be considered to have accepted your appointment when you begin to exercise your authority or perform duties as an agent or by any other assertion or conduct indicating acceptance. 244.13. If you have already begun to act as agent, you may resign by giving notice as provided in the document or as provided in section 244.18.
What are Your Duties as Agent? Regardless of the provisions of the power of attorney document, once you have accepted your appointment as agent you are subject to certain duties under state law. 244.14. Your duties include the following:
- As agent, you are a “fiduciary.” This means you must act solely in the principal’s best interest. It also means you must act prudently and reasonably with regard to all actions you take in your role as agent. Upon court review, fiduciaries are held to the highest standard of care.
- You must avoid all conflicts of interest. You must remain independent of any financial or business transactions that might be carried out under the terms of the power of attorney. Again, your responsibility is to act in the principal’s best interest. That said, the principal may have authorized you to enter into transactions on his or her behalf in which you are personally interested (called self-dealing) as long as the terms of the transaction are fair to the principal.
Practice Tip: Consult an attorney before entering into any transaction in which you are personally interested.
- You must respect the power of attorney document. What does it direct you to do, what does it authorize you to do, and what does it prohibit you from doing?
- You may not take certain actions unless the power of attorney document specifically authorizes them. 244.41.
- All of the restrictions in section 244.41 are important but the one that prompts the most questions (and controversy) has to do with gifts of the principal’s assets. Unless you are specifically authorized to make gifts, you may not. And if you are authorized to make gifts, you may do so only in accordance with the terms of the power of attorney and subject to section 244.57. You also may have to sell some of the principal’s assets to raise cash.
Practice Tip: Before making any gifts or selling any assets, review the principal’s estate plan, if available, and consult an attorney.
- Do not place any of the principal’s assets in your name and do not commingle your assets with any of the principal’s assets. If any of the principal’s assets are already part of an account titled in your joint names, you must maintain separate records concerning the principal’s funds.
May the Principal Continue to Conduct Financial Affairs? Yes. Assuming the principal is not incapacitated, giving you a power of attorney does not prevent the principal from making decisions or conducting business for himself or herself. If you and the principal disagree, the principal’s decision controls. (This assumes the decisions are announced at the same time. For example, if you decided to sell an item of property to raise cash, the principal’s later announcement that he or she did not want it sold doesn’t undo the sale.) If there is a conflict between what the principal wants to do and what you think is in the principal’s best interest, either the principal should revoke the power of attorney (or your authority to act under it) or you should resign.
Do You Have Authority Over Personal and Family Maintenance? Unless the power of attorney provides otherwise, language granting you general authority with respect to personal and family maintenance gives you considerable authority. 244.53.
Are You Entitled to Receive Compensation? Read the power of attorney and be sure to comply with the provisions that pertain to your right to receive compensation for acting as agent (including whether you are prohibited from receiving compensation). If the power of attorney is silent as to compensation, you are entitled to receive reasonable compensation under the circumstances. You are also entitled to be reimbursed for reasonable expenses you incur as agent, including fees for legal, accounting and record keeping services. 244.12.
Practice Tip: Be sure to maintain careful records indicating how much you have been paid and documentation that justifies such compensation. This may include a record of your activities and the time required to perform them. Daily time records are best. Judges know daily time records are more accurate than summaries prepared at the end of a week or month.
What Records Must You Keep? One of your duties that deserves special mention is your duty to maintain careful and complete records of all actions you take on behalf of the principal. Read the power of attorney and be sure to follow its record-keeping requirements. If the power attorney is silent as to your record-keeping responsibilities, state law requires that you keep a record of all receipts, disbursements, and transactions made on behalf of the principal. 244.14(2)(d).
Practice Tip: Keep all receipts. Maintain good records of all disbursements you make. Note each payee and the reason for your payment. Keep records of any liabilities of the principal with which you have involvement or of which you have knowledge. Maintaining such records minimizes the possibility that you will be exposed to liability. If you need advice or assistance regarding how to establish and maintain a record-keeping system, hire someone. As mentioned, the expense may be paid or reimbursed from the principal’s funds. 244.12.
To Whom Must You Furnish Reports of Your Activities? Read the power of attorney and be sure to follow its reporting requirements. If the power of attorney is silent as to your reporting responsibilities, you are not required to disclose receipts, disbursements, or transactions conducted on behalf of the principal unless ordered by a court or requested by an authorized individual. Who has the right to request written reports of your activities? The principal does, of course, but also a guardian, conservator or another fiduciary acting for the principal (such as the trustee of the principal’s revocable living trust), and a governmental agency having regulatory authority to protect the welfare of the principal. The last one in the list comes as a surprise to many agents. Upon the principal’s death, the personal representative or successor in interest of the principal’s estate has the right to request a written report of all of your activities as agent. 244.14(8).
Practice Tip: See the previous Practice Tip!
If you are requested to disclose information, you must comply with the request within 30 days or provide a written explanation why you need additional time to comply, and in that case you must comply with the request within an additional 30 days. 244.14(9).
How Do You Sign Documents as Agent? To avoid personal liability, when you sign documents on the principal’s behalf, you must specifically indicate that you are acting as the principal’s agent. For example, you should sign documents as follows: “[Name of Principal] by [Name of Agent], as Agent.”
How Do You Prepare for Your Role as Agent? Ask Questions; Be Informed. If possible, have the principal provide you with the name and contact information of individuals the principal relies on, such as an attorney, financial consultant, physician, dentist, other health care providers, tax return preparer, life insurance agent, automobile and homeowner’s insurance agent, and long-term care insurance agent. Also, ask about the location of business, financial and personal records, such as a safe deposit box, bank and brokerage statements, insurance policies, tax returns, deeds and title insurance policies, and estate planning documents. Finally, ask whether the principal has any special instructions for you and if so reduce them to writing.
What if a Person Refuses to Recognize Your Authority as Agent? Generally, if the principal’s signature on a power of attorney has been acknowledged by a notary public, a third party, such as a bank or brokerage firm, may not refuse to accept the power of attorney if the reason for refusal is based on the date of the document or a requirement that an additional or different form must be used. A third party may, however, refuse to accept the power of attorney within 10 days of presentment if any of the conditions listed in 244.20(1) apply.
Will the Social Security Administration (SSA) Allow You to Manage the Principal’s Benefits? Regardless of state law, the SSA does not recognize a power of attorney as conferring authority to manage another person’s benefits. Nor is it sufficient to have your name on the principal’s bank account. If you have power of attorney for someone who is incapable of managing his or her own benefits, you must apply to be appointed a “representative payee” by the SSA. See https://www.ssa.gov/payee/faqrep.htm.
What if the Principal Has Appointed More Than One Agent? The principal may have designated one or more co-agents to serve with you. Unless the power of attorney otherwise provides, each co-agent may exercise authority independently. 244.11(1). Read the document. Does it require co-agents to act unanimously or by majority? Unless the power of attorney otherwise provides, each co-agent is subject to the same duties, standard of care, record-keeping requirements, and reporting requirements.
Co-agents should be aware of section 244.11(4). An agent who has actual knowledge of a breach or imminent breach of fiduciary duty by another agent must notify the principal and, if the principal is incapacitated, take any other action reasonably appropriate in the circumstances to safeguard the principal’s best interest. An agent who fails to take such action is liable for the reasonably foreseeable damages that could have been avoided if the agent had notified the principal or taken other action.
What if There is More Than One Power of Attorney? The principal may have signed more than one power of attorney document. The execution of a power of attorney does not revoke a power of attorney previously executed by the principal unless the subsequent power of attorney provides that the previous one is revoked or that all other powers of attorney are in fact revoked. 244.10(6).
How is a Power of Attorney Terminated or Your Authority to Act Terminated? The power of attorney may provide for a termination date or the principal may revoke it. The power of attorney also terminates if the principal revokes your authority or if you become incapacitated, resign, or die, and the document does not provide for a successor agent. 244.10. A power of attorney created under Chapter 244 is durable, meaning that it is not terminated by the principal’s incapacity, unless the document otherwise provides. A power of attorney that is not created under Chapter 244 may not be durable and thus may terminate upon the principal’s incapacity, unless the document otherwise provides. In any event, all powers of attorney terminate when the principal dies. 244.10(1)(a).
What If You Don’t Know What To Do? Get Advice. If you have any questions about your rights and responsibilities as an agent under a Wisconsin power of attorney, consult an experienced lawyer who is licensed to practice in Wisconsin. Forewarned is forearmed. As mentioned, fees for legal advice are appropriate expenses to be paid or reimbursed from the principal’s funds. 244.12.
Who Has the Right to Seek Judicial Review of Your Actions? A number of people have the right to ask a court to review your conduct as agent and grant appropriate relief. If the court finds you violated your duties, the relief may include an order that you use your funds to restore the value of the principal’s property to what it would have been had the violation not occurred. The relief also may include an order that you reimburse the principal for the attorney fees and costs you paid from the principal’s funds to defend yourself. The people who have the right to petition the court include: (1) the principal; (2) a guardian, conservator, or other fiduciary acting for the principal; (3) a person authorized to make health-care decisions for the principal; (4) the principal’s spouse, parent, or descendant; (5) the principal’s domestic partner; (6) an individual who would qualify as a presumptive heir of the principal; (7) a person named as a beneficiary to receive any property or benefits on the principal’s death, (8) a person named as a beneficiary of a trust created by or for the principal that has a financial interest in the principal’s estate; (9) a governmental agency having regulatory authority to protect the welfare of the principal; (10) the principal’s caregiver or another person who demonstrates sufficient interest in the principal’s welfare; and (11) a person asked to accept the power of attorney. 244.16
Practice Tip: Follow the power of attorney document and the law and see all previous Practice Tips!
 Questions concerning a power of attorney for finances are a matter of state law. The comments in this article are based on Wisconsin law, which is set forth in Chapter 244 of the Wisconsin Statutes. See https://docs.legis.wisconsin.gov/statutes/statutes/244. Section numbers in this article shown as hyperlinks are references to sections of Chapter 244.
 Jessica Merkel introduced this topic earlier this year. See https://www.ruderware.com/trusts-estates/isnt-an-online-financial-power-of-attorney-form-good-enough/ Jessica hit a nerve, so to speak. Her piece prompted requests for more detailed guidance for agents under a Wisconsin power of attorney.