Life presents moments when we must place immense trust in another person to act on our behalf. This is particularly true when planning for a time when you might be unable to manage your own affairs due to illness or injury. A South Carolina Durable Power of Attorney (DPOA) is a foundational legal instrument designed for this exact purpose, allowing you to appoint a trusted individual—an “agent”—to make decisions for you. Yet, the scope of an agent’s authority is not limitless. It is a role defined by significant legal duties and strict boundaries.

Identifying the Parties: Who is the Principal and Who is the Agent?

To appreciate the function of a DPOA, it is important to know the key individuals involved:

• The Principal: This is you—the person creating the Durable Power of Attorney. You are the one granting authority to another individual to act on your behalf. As long as you are mentally competent, you retain full control to make your own decisions and can revoke or change the DPOA at any time.
• The Agent or Attorney-in-Fact: This is the person you appoint to act for you. It is a common point of confusion, but this individual does not need to be a lawyer. The term “attorney-in-fact” is a legal title for the agent you have chosen. This person should be someone you trust implicitly, as they will have a legal obligation to manage your affairs with your best interests at heart.

What Does “Durable” Mean in a South Carolina Power of Attorney?

The “durable” provision is the most significant feature of this type of power of attorney. In South Carolina, a standard power of attorney automatically terminates if the principal becomes incapacitated. A durable power of attorney, however, remains in effect even after the principal loses the ability to make decisions for themselves.

This durability is what makes the document so effective for incapacity planning. It ensures a seamless transition of management, allowing your agent to pay bills, handle financial matters, and make important decisions without interruption or the need for court intervention. Without a durable power of attorney, your family might be forced to pursue a costly and time-consuming guardianship or conservatorship proceeding through the probate court.

The Fiduciary Duty: An Agent’s Highest Obligation

Appointing an agent is not merely signing a form; it is entrusting that person with a profound legal and ethical responsibility known as a fiduciary duty. This is the highest standard of care recognized by law. An agent must always act in the principal’s best interest, and this duty encompasses several key obligations:

• Duty to Act with Care: The agent must manage the principal’s property and finances prudently and responsibly. This means making careful decisions and avoiding unnecessarily risky financial actions.
• Duty of Loyalty: The agent must act solely for the benefit of the principal. They cannot use the principal’s assets for their own personal gain or for any other purpose that does not directly support the principal’s welfare.
• Duty to Avoid Self-Dealing: An agent cannot engage in transactions that create a conflict of interest. For example, an agent generally cannot sell the principal’s property to themselves at a below-market price or borrow money from the principal’s accounts.
• Duty to Keep Records: An agent has a legal obligation to maintain detailed and accurate records of all financial transactions made on behalf of the principal. This includes keeping receipts, bank statements, and a log of all income and expenditures. This ensures transparency and allows for a clear accounting of the agent’s actions.

A breach of this fiduciary duty can result in serious legal consequences for the agent, including personal liability for any financial losses and potential legal action to have them removed.

General Powers Granted to an Agent

A South Carolina Durable Power of Attorney can grant a wide range of powers, allowing the agent to handle nearly every aspect of the principal’s financial life. These general powers are often listed in the document and can include the authority to:

• Manage Banking Transactions: Open or close bank accounts, withdraw funds, deposit checks, and handle all other routine banking matters.
• Handle Real Estate: Buy, sell, lease, or mortgage real estate on the principal’s behalf.
• Oversee Investments: Manage stocks, bonds, mutual funds, and other securities.
• Operate a Business: Continue the operation of a small business, including paying employees and managing inventory.
• Access Government Benefits: Apply for and manage benefits like Social Security, Medicare, or veterans’ benefits.
• Manage Retirement Plans: Make decisions related to IRAs, 401(k)s, and other retirement accounts.
• Handle Tax Matters: Prepare and file tax returns and communicate with the IRS on the principal’s behalf.

“Hot Powers”: Authority That Requires Specific Language

While a DPOA can grant broad authority, South Carolina law identifies certain sensitive powers, often called “hot powers,” that an agent can only exercise if they are explicitly and clearly stated in the document. General language is not enough. The principal must specifically grant the agent the authority to:

• Make Gifts: The power to give away the principal’s property or money. Without specific authorization, an agent cannot make gifts, as it would violate the duty to preserve the principal’s assets.
• Create or Change Rights of Survivorship: This involves altering how property is titled, such as adding a joint owner to a bank account with the right to inherit it upon the principal’s death.
• Create or Change a Beneficiary Designation: The ability to change the named beneficiaries on life insurance policies, retirement accounts, or other assets.
• Delegate Authority: Grant another person the power to act as an agent.
• Waive the Principal’s Right to Be a Beneficiary: For example, declining an inheritance from someone else’s will or trust on behalf of the principal.
• Create, Amend, or Revoke a Trust: This is a very significant power that allows an agent to alter the principal’s estate plan.

These powers are “hot” because they carry a high potential for abuse and can dramatically affect the principal’s estate plan. Therefore, they must be granted with clear and unambiguous intent.

The Limits of an Agent’s Power: What an Agent Can Never Do

Even with the broadest grant of authority, there are certain actions an agent can never take. These limitations are in place to protect the personal rights and ultimate intentions of the principal. An agent cannot:

• Change the Principal’s Will: A will is a unique legal document that can only be created or altered by the principal while they are of sound mind.
• Vote in an Election: The right to vote is personal and cannot be delegated.
• Make a Sworn Statement: An agent cannot sign an affidavit or any other document attesting to facts under oath on behalf of the principal. The principal must swear to their own personal knowledge.
• Act After the Principal’s Death: An agent’s authority under a Durable Power of Attorney ends immediately upon the death of the principal. At that point, the executor named in the principal’s will (or a court-appointed administrator) takes over the management of the estate.

Third-Party Acceptance of a DPOA

A common frustration is when a bank, brokerage firm, or other financial institution refuses to honor a valid Durable Power of Attorney. South Carolina law provides protections in these situations. If a DPOA is properly executed, a third party must accept it or request a certification or legal opinion. A third party that improperly refuses to honor a valid DPOA may be held liable for any damages that result from the refusal, including attorney’s fees. This provision adds a layer of assurance that your designated agent will be able to act when needed.

How an Agent’s Authority Can Be Terminated

An agent’s authority does not necessarily last forever. It can be terminated in several ways:

• Revocation by the Principal: As long as the principal is competent, they can revoke the DPOA at any time by providing written notice to the agent.
• Death of the Principal: As mentioned, the agent’s power terminates automatically upon the principal’s death.
• The Terms of the DPOA: The document itself might specify a termination date or a condition that ends the agent’s authority.
• Divorce: If the agent is the principal’s spouse and they divorce, the agent’s authority is automatically revoked unless the DPOA states otherwise.
• Removal by a Court: If an agent is found to have abused their power or breached their fiduciary duty, a court can issue an order removing them.

Safeguarding Your Future with Clear Legal Guidance

A South Carolina Durable Power of Attorney is an essential component of a comprehensive estate plan. It provides a private, efficient, and legally sound way to ensure your financial and personal affairs are managed by someone you trust if you are unable to do so yourself. However, the authority granted is significant, and the document must be drafted with precision to reflect your wishes and comply with state law.

If you are considering creating a Durable Power of Attorney or have questions about an agent’s authority, the De Bruin Law Firm is here to provide experienced legal guidance. We are dedicated to helping our clients protect their interests and plan for the future with confidence. Call us today at (864) 982-5930 or message us online to schedule a consultation.