Can an Agent Under a Power of Attorney be Personally Liable for the Principal's Car Accident?

Full question:

My mother has been experiencing some dementia and has over medicated herself. My sister and I have a durable power-of-attorney on file to handle her affairs. However, since she has not been medically declared incapacitated to handle her affairs could we be held responsible if she were to drive and have an accident, or if she cause harm to herself by over medicating?

• Category: Power of Attorney
• Date: 04/07/2025
• State: Texas

Answer:

As a principal, if the principal's decisions conflict with those of the agent, the principal's decision will govern, assuming that the agent confers with the principal prior to taking an action. If an agent has acted on the principal's behalf and acted within the scope of authority granted by the power of attorney, then the principal may be obligated by the terms and conditions of his actions.

The person designated to be the agent assumes certain responsibilities. The agent is obligated to act in the principal's best interest. The agent must always follow the principal's directions. Agents are "fiduciaries," which means that the agent must act with the highest degree of good faith in behalf of their principals. The agent must keep his money separate from the principal's; keep detailed records concerning all transactions he engages in on the principal's behalf; not stand to profit by any transaction where the agent represents the principal's interests; and not make a gift or otherwise transfer any of the principal's money, personal property, or real estate to himself unless the power of attorney explicitly states he can do so. An agent who acts against the principal's interest for his own gain, or acts outside the authority granted in the power of attorney, may be held personally liable.

Generally, an agent isn't personally liable under a power of attorney as long as authority isn't exceeded or abused. It will be a matter of subjective determination for the court to determine whether there was a breach of fiduciary duty, based on all the facts and circumstances involved. Some of the factors that may be considered include, among others, whether the fiduciary personally benefited at the expense of the principal, or failed to disclose information to the principal’s detriment.

In some cases where a person becomes incapacitated without having a power of attorney, it may be necessary to establish a guardianship to manage the person's welfare and financial affairs. Guardianships may be either over a person, their estate, or both. A guardian manages the daily financial matters of the estate and/or provides care for the person.