Power of Attorney and Attorney-in-Fact Liability
Power of attorney instruments for finances are common estate planning tools. The parties to a power of attorney are the principal and attorney-in-fact. The principal designates and nominates the attorney-in-fact to engage in specified and authorized activities on the principal’s behalf. The attorney-in-fact is a fiduciary and must act in the principal’s interests.
The relationship between a principal and attorney-in-fact is an agency relationship. § 404.703(1), RSMo. An attorney-in-fact may take actions which would otherwise constitute a breach of fiduciary duty if expressly authorized by the power of attorney instrument. § 404.710.6(1)-(12), RSMo. This includes, without limitation, the making of gifts, changing of survivorship interests, and the changing of beneficiary designations. Id. An attorney-in-fact can have implied authority to act, even in the context of § 404.710.6. Ingram v. Brook Chateau, 586 S.W. 3d. 772, 775 (Mo. 2019). If a power of attorney authorizes the attorney-in-fact to engage in “self-dealing,” there is no breach. Antrim v. Wolken, 228 S.W.3d 50, 54 (Mo. Ct. App. 2007). Likewise, there is no breach for self-gifting if it is expressly authorized. Randall v. Randall, 497 S.W.3d 850, 855 (Mo. Ct. App. 2016).
In contrast, § 404.710.7 enumerates four types things an attorney-in-fact may not do even when authorized by the power of attorney: (1) make, publish, amend or revoke a will for the principal; (2) make, execute, modify or revoke a living will for the principal; (3) to require the principal, against the principal’s will, to take any action or to refrain from taking any action; or (4) to carry out any actions specifically forbidden by the principal while not under any disability or incapacity.
To the extent litigation ever arises relating to a power of attorney — and an attorney-in-fact’s actions — it is extremely important to review the actual power of attorney instrument.