A power of attorney (POA) grants someone the legal authority to act on another person’s behalf. With this authority comes a legal and ethical responsibility to act in the principal’s best interest. When an agent under a POA violates that duty, they can be held liable for breach of fiduciary duty—sometimes with serious legal consequences.
Understanding Fiduciary Duty in a Power of Attorney
In Texas, an agent acting under a durable or statutory power of attorney is considered a fiduciary. Under the Texas Estates Code § 751.101, an agent must:
- Act in the principal’s best interest;
- Avoid conflicts of interest;
- Maintain accurate records;
- Preserve the principal’s property and assets;
- Not act beyond the scope of the powers granted.
These obligations are not optional. They are enforceable under Texas law and exist to protect vulnerable individuals—often the elderly or incapacitated—from financial exploitation or mismanagement.
When Is a POA Liable for Breach of Fiduciary Duty?
A breach occurs when the agent acts outside the scope of authority or contrary to the principal’s interests. Examples include:
- Misappropriating funds for personal use
- Failing to keep records or provide an accounting upon request
- Transferring assets to themselves or others without authorization
- Making decisions the principal never intended or expressly prohibited
- Neglecting responsibilities, such as paying bills or managing assets
In such cases, family members, interested parties, or even court-appointed guardians can bring a legal action against the agent.
Legal Consequences and Remedies
When an agent is found to have breached their fiduciary duty, Texas courts may impose a range of remedies, including:
- Removal of the agent from their position
- Monetary damages, including return of misappropriated funds
- Punitive damages, if the conduct was intentional or egregious
- Injunctions or court orders limiting further harm
- Attorney’s fees and court costs awarded to the harmed party
Notably, Texas Estates Code § 751.253 permits a court to review the agent’s conduct and order restitution if the agent acted improperly.
How to Prove a Breach of Fiduciary Duty
To establish liability for breach of fiduciary duty in Texas, a plaintiff must show:
- A fiduciary relationship existed (e.g., the agent under POA),
- The agent breached their duty,
- The breach caused harm to the principal or the estate.
Clear documentation, financial records, witness testimony, and expert opinions may all support such claims.
Protecting Against POA Abuse
To minimize the risk of breach, consider the following:
- Appoint a trustworthy, financially responsible agent;
- Limit the scope of powers granted in the POA;
- Require regular accountings or reports;
- Consider appointing co-agents or requiring dual signatures for major transactions;
- Consult an attorney to draft a POA with built-in safeguards.
When to Involve a Probate or Fiduciary Litigation Attorney
If you suspect an agent under a POA has misused their authority or breached their fiduciary duty, act quickly. Early legal intervention can prevent further damage and may preserve or recover misused assets.
At ME Law, PLLC, we represent clients in fiduciary litigation, probate disputes, and elder financial abuse matters throughout Central Texas. We’re here to help you understand your rights, protect your loved ones, and pursue justice when fiduciary duties are violated.
Contact us today to schedule a consultation and learn more about holding a POA agent accountable for breach of fiduciary duty.
