Power of Attorney Does Not Permit Self-Dealing

A power of attorney is a document signed by a principal that empowers another person, an agent or attorney-in-fact, to perform acts on behalf of the principal.  There are some key limitations to what an agent or attorney-in-fact may do on behalf of the principal.

First and foremost, a power of attorney is only valid as long as the principal is alive.  That is to say, if the principal dies, the attorney-in-fact has no power or right to continue to act on behalf of the principal.

Second, an attorney-in-fact is prohibited from any act of self-dealing.  In Tewksbury v. Tewksbury, a court invalidated a number of property transfers an attorney-in-fact made because the attorney-in-fact was self-dealing.  In that case, a father signed a power of attorney nominating his son to serve as his attorney-in-fact.  After the power of attorney was signed, the son proceeded to transfer all of his father’s property into his own name.  Whenever an attorney-in-fact performs any act whereby the attorney-in-fact benefits financially, it will likely be seen as self-dealing and is void.

If you are serving as an attorney-in-fact, it is important that you have a clear understanding of what you may do and what you are prohibited from doing.  Failing to abide by the law may result in your actions being invalidated.

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