Alabama POA Fiduciary Duty: What Agents Must Do (and Cannot Do)

What Fiduciary Duty Means for POA Agents

When you accept appointment as an agent under an Alabama power of attorney, you take on a fiduciary relationship with the principal — your parent. This is the highest standard of duty the law imposes on any relationship. It means their interests come before yours in every financial decision you make on their behalf.

Alabama Code § 26-1A-114, part of the Uniform Power of Attorney Act, spells out the core obligations. These are not suggestions. They carry legal force. Serious breaches can result in civil liability, court removal, and, when the conduct also violates a criminal law, criminal prosecution under Alabama's elder financial exploitation statutes.

The Five Core Duties

Loyalty

Act solely in your parent's best interest. Every financial decision — paying bills, managing investments, selling property, choosing care providers — must serve the principal's welfare, not your own convenience or financial gain. If a decision benefits you and your parent, you need to evaluate whether the benefit to you is influencing the decision.

Avoiding Conflicts of Interest

Do not enter into transactions where your interests conflict with your parent's unless the transaction is consistent with the principal's best interest and handled with care, competence, and diligence. Buying your parent's car below market value, lending yourself money from their accounts, or steering their business to a company you own can be conflicts that require careful documentation.

The UPOAA does not make every transaction that benefits an agent invalid. An agent who acts with care, competence, and diligence for the principal's best interest is not liable solely because the agent also benefits or has an individual or conflicting interest. Separate statutory "hot powers" — such as gifts, changing rights of survivorship, or altering beneficiary designations — still require explicit authorization in the POA.

Prudent Management

Handle your parent's affairs with the care and competence a reasonable person would exercise in managing their own property. This means: do not make reckless investments, do not ignore unpaid bills until penalties accrue, do not let insurance policies lapse, and do not neglect tax filings. You do not need to be a financial professional, but you must act responsibly.

Record-Keeping

Maintain complete, accurate records of every transaction you conduct as agent. This includes bank statements, receipts, invoices, property records, and tax filings. If a family member, a court, or the principal themselves later questions your management, your records are your defense. Sloppy or missing records are treated as a red flag in any dispute.

Asset Segregation

Never commingle the principal's funds with your own. Your parent's money must stay in accounts titled in their name (or "as agent for" them). Depositing their Social Security check into your personal account, even temporarily, violates this duty. Open a dedicated bank account labeled appropriately and route all of the principal's income and expenses through it.

What Happens When These Duties Are Violated

Alabama takes agent misconduct seriously. The consequences escalate:

Civil liability under the UPOAA. A person with standing under § 26-1A-116 — which can include the principal, an agent, certain family members, a caregiver, or someone with a sufficient legal interest — can petition the court to review the agent's conduct and seek appropriate relief, including an accounting. If the court finds a breach of fiduciary duty, the agent may be liable to the principal or the principal's successors for amounts needed to restore the value of the principal's property and reimburse attorney's fees and costs paid on the agent's behalf.

Court removal. The probate court can remove an agent who has breached their duties and appoint a successor agent or, if necessary, a court-supervised conservator.

Criminal prosecution. Misusing a parent's funds as their POA agent can constitute financial exploitation of an elderly person under Alabama Code §§ 13A-6-192 through 13A-6-197. Depending on the amount involved, this ranges from a misdemeanor to a Class B felony. A conviction or registry placement can disqualify someone from roles covered by Alabama's elder-abuse registry rules, including some caregiving positions and proposed-guardian appointments.

Practical Steps to Stay Compliant

• Open a dedicated bank account in the principal's name with you listed as agent. Run all income and expenses through this single account.
• Keep a transaction log — a simple spreadsheet noting each payment, deposit, and transfer with the date, amount, payee, and purpose.
• Save all receipts and statements. Digital copies stored in a dedicated folder are fine, but keep them organized and backed up.
• Pay yourself only as permitted by the POA and applicable law. Unless the POA provides otherwise, Alabama law entitles an agent to reimbursement of reasonable expenses and reasonable compensation. Keep records of both.
• Get appraisals before selling real property or other significant assets. Document that any sale was at fair market value.
• Report to other family members proactively. Regular informal updates reduce suspicion and prevent the kind of disputes that end up in court.

The Alabama Power of Attorney & Guardianship Kit includes the UPOAA-compliant POA form with fiduciary duty provisions built in, plus a record-keeping framework designed to help agents stay organized from day one.

See more Alabama guides →