Attorney's Liability and Authority Under a Power of Attorney

Note this article provides legal information, not legal advice. Reading this article should not be construed as obtaining legal advice from Ross Estate Law.

When an individual grants someone authority over their financial and personal matters through a Power of Attorney (POA), it is crucial that the attorney understands their legal and ethical responsibilities. However, with this authority comes potential liability for any breaches of duty. Here’s an overview of an attorney’s potential liability and the scope of their authority:

1. Attorney’s Liability for Breach of Duty (Section 6)

An attorney must fulfill their duties with the utmost care and in accordance with the terms of the Power of Attorney. If the attorney fails to do so, they may be held liable for a breach of duty. This includes failing to act in the donor’s best interests, mishandling assets, or acting outside of the given authority.

However, in some cases, if the attorney acted honestly and reasonably, the court may relieve the attorney from all or part of the liability (Section 6(2)). This recognizes that, while mistakes may happen, they should not necessarily result in full liability if the attorney acted in good faith and made reasonable decisions.

2. Authority of the Attorney (Section 7)

The Power of Attorney grants the attorney specific authority to manage the property and financial affairs of the donor. The scope of this authority depends on the terms laid out in the document:

• Specific Authority (Section 7(2)(a)): The donor may grant the attorney authority over only certain property or financial matters. For example, the attorney may only be authorized to manage specific accounts, property, or investments.

• General Authority (Section 7(2)(b)): Alternatively, the donor may provide general authority, granting the attorney control over all of the donor’s property and financial affairs. This offers a broader scope of authority, enabling the attorney to make a wide range of decisions.

3. Restrictions on Delegation of Authority (Section 7(3))

Unless the Power of Attorney specifies otherwise, the attorney cannot delegate their granted authority to someone else. This means that, for the most part, the attorney must directly carry out their duties and cannot pass on the responsibility or decision-making to another person.

This provision ensures that the attorney remains accountable for managing the donor’s affairs and prevents the potential abuse of authority by third parties.

Conclusion

Being an attorney under a Power of Attorney brings with it significant responsibilities. The attorney must act diligently, follow the donor’s instructions, and ensure that their actions are in the donor’s best interests. However, should a breach of duty occur, there is some room for the court to show leniency if the attorney acted honestly and reasonably. Additionally, the scope of an attorney’s authority is determined by the specific terms of the Power of Attorney, with the donor having the flexibility to grant specific or general authority.

Please note that the information provided in this blog post is for general informational purposes only and is not intended as legal advice. Reading this post does not create an attorney-client relationship, and the information shared here should not be relied upon as a substitute for professional legal counsel. If you require personalized legal advice regarding estate planning or any related matters, we encourage you to schedule a consultation with Ross Estate Law to discuss your unique circumstances.