What you can, can’t, and MUST do with a power of attorney.

When I was in 6th grade, a Euro-techno-rap-dance song dominated both the airwaves of WVNA and the loudspeakers at Mega Skate, and it basically had one line, sung over and over and over…and over…again:

“I’VE GOT THE POWER!”

Several years later, a divinely-empowered Jim Carrey roamed the streets of Buffalo in Bruce Almighty, lip-syncing and dancing to that insufferable earworm as he wreaked havoc wherever and however he pleased:

Yeah. Anyhoo. Where was I?

Ah, yes. POWER. Of attorney, to be specific.

Too many folks these days act like ol’ Bruce when they have a POA — that is, like they can do whatever they please, without much in the way of consequences.

But as Voltaire — or was it SpiderMan’s uncle? — said: “With great power comes great responsibility.” Or if you prefer the red-letter version:

“From everyone who has been given much, much will be demanded; and from the one who has been entrusted with much, much more will be asked.”

So let’s talk for a minute about what you can, can’t, and MUST do if you’ve GOT THE POWER…of attorney.

What you CAN do

If you’ve been named as an attorney-in-fact (i.e., an agent) under a power of attorney in Alabama, you have whatever powers are listed or incorporated by reference in the power of attorney document, assuming it is validly executed. Many, if not most, powers of attorney I see these days contain form language (what lawyers sometimes call “bolierplate”) from the Alabama Code, or otherwise incorporate by reference the powers listed in Alabama Code 26-1A-204 through 217. Don’t worry, I’m not going to list them all here — you’ll be asleep faster than a narcoleptic doing his taxes during a rainstorm. Suffice it to say, you have the legal power to do just about anything the principal — the person who gave you the POA — could do for him- or herself.

What you CAN’T do

Don’t get too drunk on your power, because there are definitely things you absolutely can’t do with your POA. What you can’t do falls into two basic categories:

1. You can’t do things the POA doesn’t specifically authorize you to do. Alabama courts have said, time and again, that POAs are to be “strictly construed.” That means that if the POA doesn’t say or incorporate by reference to the Alabama Code that you can do a certain type of thing, you can’t do that certain type of thing. Some POAs have specific line items that ask the principal whether he or she wants to give his or her POA the authority to certain things, like change beneficiary designations on accounts and insurance policies or convey real estate. If the principal indicates “no” — or if the POA is entirely silent on the specific power — then you can’t do it!

2. And the polestar is this: you can’t do anything that is not in the principal’s best interests. Let me be even clearer here: you can’t self-deal. You can’t use the POA to enrich yourself, and anything you do under the POA that has the effect of making you richer will be looked at very, very suspiciously by lawyers like me — and judges, and juries — one day. You have what the law calls an unwavering duty of loyalty to the principal, one that requires you to exercise sound and reasonable business judgment. And here’s another kicker: if you’re a professional — say, an accountant or a lawyer or a businessman or a professor — the law may impose an even heavier burden on you when it assesses whether you’ve exercised sound judgment.

What you MUST do

Well, I basically just said it: you must, according to Alabama law, do the following general things:

1. act in accordance with the principal’s reasonable expectations and in his or her best interest;

2. act in good faith; and

3. act only within the scope of authority granted in the POA document.

But there’s more. You must also:

1. act loyally for the principal’s benefit;

2. act so as not to create a conflict of interest that would impair your ability to act impartially in the principal’s best interest;

3. act with the care, competence, and diligence ordinarily exercised by agents in circumstances similar to yours;

4. keep a record of all receipts, disbursements, and transactions made on behalf of the principal;

5. cooperate with the principal’s health care proxy (if it is someone other than you); and

6. attempt to preserve the principal’s known estate plan — that is, the principal’s last will and testament or other estate planning documents.

This isn’t my opinion — this is straight, pure, unadulterated Alabama statutory law. Read it for yourself at Alabama Code 26-1A-114.

In my practice, I find that many POAs don’t take their responsibilities as seriously as they should, especially when it comes to avoiding conflicts of interest and keeping records of their transactions on the principal’s behalf.

But they should: that same statute says that a court, a guardian, a conservator, an executor, or even an heir (“successor in interest” to the estate) may require a POA to produce their transaction records.

Failing to appreciate the great responsibility that comes with a power of attorney can expose an agent to lawsuits — not only by the principal, but by the principal’s heirs or beneficiaries under the principal’s estate plan. Just as Bruce Almighty finds out, recklessly exercising one’s power, or even just failing to use it wisely, leads to chaos and strife:

Don’t be Bruce.

If you have questions or concerns about how someone you know has used or abused a power of attorney over a loved one, call me at 256.764.0097, or email at info@singingriverlaw.com.