A comprehensive estate plan should always include a general durable power of attorney for financial matters (“GDPOA”). A GDPOA allows an individual to name and agent, sometimes referred to as the “attorney-in-fact”, to act for that individual with regard to business and/or financial matters. A typical GDPOA will be effective at the time the individual signs it and thereafter the agent can “step into the shoes” of the individual for a wide variety of business transactions, including executing deeds, overseeing banking transactions, and signing checks on behalf of the individual. Most generally, this may occur when a parent ages, and a child is named as an agent for that parent. It may simply be more convenient for an adult child to pay bills and handle banking, or in some cases, if there is a loss of capacity and an individual is no longer able to understand the transaction required, the agent can sign on behalf of the individual to complete the transaction.
An agent may also be asked to complete admissions paperwork or statements of financial responsibility for an individual when an individual is admitted to a hospital or a care facility. This is an especially important distinction legally!
In these cases, it is especially important that the agent always shows his or her representative capacity. An agent should never simply sign his or her own name. This may cause the agent to become personally liable and legally responsible for a financial obligation or debt of the individual for whom they are acting as agent. Instead, an agent should always sign in such a way as to show that the document is being signed for the individual for whom he or she is acting. For example, if the individual is named John Smith and the Agent for John is Mary Smith, then when signing, Mary should sign, “JOHN SMITH, By: Mary Smith, attorney-in-fact” or Mary Smith, as attorney-in-fact for JOHN SMITH”. In this way the responsible party is John Smith. Mary is simply signing on behalf of John, thereby obligating John, but not herself.