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What You Need to Know when Becoming Power of Attorney or Trustee.

The Probate Law Center Feb. 22, 2022

Have you recently been asked by a parent or a loved one to act as their Power of Attorney for either financial or medical decisions? Or perhaps, Mom and Dad would like for you to be Trustee of their newly signed Trust. Before you agree to either, there are some things you should know.

First, you have just entered into a fiduciary relationship that, under the law, requires to you do (or not to do) very specific things. Missouri and Kansas law requires any person appointed as a power of attorney to act "in the principal's best interest, in good faith, prudently." RSMo. §404.710; K.S.A. 58-654. What does 'best interest' 'good faith' and 'prudently' mean?

1. Any money of the principal (the person giving you the power of attorney) must be kept in a separate account at all times, for all purposes, without exception. 

2. You should keep an accounting of the money you are spending on behalf of the principal. This includes keeping copies of receipts for all purchases, no matter how small.

3. You are required to maintain contact with the principal, and to provide the principal with access to their finances. This does not mean let them spend their money in irresponsible ways, but providing bank statements and investment statements does qualify.

4. You should ensure you are working with the Principal (when possible) to accommodate their needs, not what is easiest or best for you.

This list is by no means exhaustive, and you should consult an attorney if you have questions regarding your specific situation. If you have been asked to act as Trustee, or you are currently acting as Trustee, the bar is even higher. Missouri statute codifies the duties and responsibilities for Trustees at RSMo. 456, et seq. For Kansas, it can be found at Chapter 58. Not only are you bound by the same rules of best interest, good faith, and prudence, you are also required to follow the trust document to a T. This means that you cannot pay yourself a fee for acting as trustee unless the Trust document authorizes it, or a Court has ordered it. Upon the death of the beneficiary of the Trust, you must give notice to the heirs, provide an initial accounting, and various other responsibilities.

As the current generation of baby boomers and pre-world war II adults continue to age, coupled with the fact that these two generations will affect the largest transfer of generational wealth this country has ever seen, it is important to know your duties under the law when acting as a power of attorney, or Trustee. At The Probate Law Center we can help you understand exactly what you should be doing when acting in this fiduciary capacity.