How Much Can Third Parties Rely on Attorneys in Fact?

Imagine this scenario: You are a teller at a bank and have been dealing with a particular customer (we’ll call her Jen) for several years. One day, instead of Jen coming in herself to take care of her banking needs, a stranger comes in her place holding a power of attorney document and stating that he will now be handling Jen’s banking affairs. Are you required to accept this stranger as Jen’s attorney in fact, and do you have a legal duty to scrutinize the document to ensure that the attorney in fact has the powers he says he does? Our Springfield power of attorney counsel explains the answers below. 

Third Parties Are Required to Honor Powers of Attorney

The powers granted to attorneys in fact vary from agreement to agreement. However, it is the policy of the state of Missouri that “an attorney in fact acting pursuant to the provisions of a power of attorney granting general powers shall be accorded the same rights and privileges… as if the principal himself or herself were personally present and acting or seeking to act.” RSMo  404.710.9. This means that third parties generally must honor the powers granted to an attorney in fact under a valid power of attorney.

There Is Generally No Duty to Inquire 

Power of attorney agreements can be long and heady documents. It would be asking a lot of third parties to comb through every detail of a power of attorney that is presented to them to ensure that the attorney in fact has the specific power they claim to have. Accordingly, Missouri law allows third parties to rely and act on the instructions of the attorney in fact with respect to any subject or purpose encompassed by the power of attorney. They generally have no duty to inquire into any of the following matters: 

• The authenticity of the document
• The validity of the designation of the attorney in fact
• Whether the attorney in fact is qualified to serve in that role
• Whether an act of the attorney in fact constitutes a breach of duty owed to the principal (including obligations related to the principal’s estate plan)
• Whether any event terminating the authority of the attorney in fact has occurred
• Whether the principal is disabled or incapacitated 
• Whether the principal had the legal capacity to execute the power of attorney
• Whether the power of attorney has been recorded (except as to transactions concerning real estate)

For more matters in which third parties have no duty to inquire, see RSMo 404.719. 

The “Actual Knowledge” Exception 

Third parties are under no duty to inquire so long as they do not have actual knowledge of any fact relating to the power of attorney.

Speak to Our Springfield Power of Attorney Counsel About Your Concerns

If you’re concerned about the ability of third parties to rely on the authority in fact — or for any other issue related to power of attorney — please contact our Springfield power of attorney counsel at the LifeGen Law Group by calling 417-823-9898 or using our online contact form.