Many Houston residents may have executed a document called a power of attorney as part of their estate planning. This document appoints a person, or group of people, as attorney in fact for a Houston resident’s estate.
The powers of an attorney in fact are very broad. For example, an attorney in fact has authority to manage, or dispose of, even the real estate or other valuable property of the person who gave her power of attorney. Likewise, the attorney in fact can sue and be sued on the person’s behalf and can even step in to operate the person’s business.
On the flip side, the attorney in fact also has an important fiduciary responsibility. Basically, this means that the attorney in fact must always exercise his powers in the best interest of the person who granted the power of attorney, that is, the principal.
The attorney in fact must also avoid conflicts of interest, never exceed the authority granted under the power of attorney and must always act in good faith and with utmost loyalty to the principal. Additionally, an attorney in fact has certain recordkeeping responsibilities. These recordkeeping responsibilities include keeping a detailed accounting of the principal’s assets and debits, as well as a log of all actions the attorney in fact does on behalf of the principal.
A power of attorney is valuable estate planning tool since it allows a Texas resident to make sure someone they know and trust is prepared to step in and handle their finances when they can no longer do so. On the other hand, this carries with it some great responsibilities shared by other trustees, executors and fiduciaries.