A power of attorney is a legal document that creates a special kind of relationship between you and someone else, called a principal-agent relationship. Through your power of attorney you grant someone—your agent—specific legal authorities to act on your behalf. This person’s role can be as limited or as broad as you decide, but you should always carefully consider the issue of payment before you choose to appoint an agent, also known as an attorney-in-fact. There is no legal requirement that you pay an agent, but your agent should be someone you can rely on and providing payment may make it easier for a potential agent to accept the position.
Salary: When you’re appointing an agent the question of pay often hinges on the extent of the agent’s actions and his or her relation to you. If, for example, you appoint an attorney to manage your finances if you get sick, payment is typically required or the attorney will not accept the position. On the other hand, if you appoint your spouse as your power of attorney for health care decisions, a salary is typically not required. Either way, you should make it clear in your power of attorney document what, if any, payment the agent will receive.
Expenses: In general, agents have the right to be compensated for any out-of-pocket expenses they incur as they perform their duties. However, an agent has specific duties when it comes to handling a principal’s finances, and you should check with an attorney before giving yourself any payments.
Stephen A. Mendel, Estate Planning Attorney
Latest posts by Stephen A. Mendel, Estate Planning Attorney (see all)
- Trust Protectors Add Flexibility - May 21, 2019
- Famous Estates-Champ or Chump? Ed White - May 17, 2019
- Modifying an Irrevocable Trust - May 16, 2019
