South Dakota — Financial Power of Attorney: What Powers Can an Agent Have?

Detailed Answer

A financial power of attorney (POA) is a written document in which one person (the principal) gives another person (the agent or attorney-in-fact) authority to act on the principal’s behalf for financial matters. Under South Dakota law, a properly executed financial POA can grant broad or narrow powers depending on the principal’s choices. Key concepts you should understand:

Durable vs. Non‑Durable Powers

A durable financial POA stays effective even if the principal later becomes incapacitated. If a POA is not durable, the agent’s authority ends if the principal becomes incapacitated. When preparing a durable POA, the document must include language showing the principal’s intent that the POA remain effective during incapacity.

Immediate vs. Springing Authority

A POA can give the agent authority immediately upon signing, or it can be “springing,” meaning the agent’s authority only begins when a specified event occurs (commonly the principal’s incapacity, often requiring certification by a doctor). Springing POAs can delay the agent’s ability to act and sometimes create practical obstacles for banks and other institutions.

Typical Financial Powers an Agent Can Be Given

• Banking: access and control of checking, savings, CDs; deposit, withdraw, endorse checks; open and close accounts; manage bill payment.
• Real estate transactions: buy, sell, mortgage, lease, and manage property. (Recording the POA may be necessary to ensure title companies or county recorders accept it.)
• Business matters: operate, buy, sell, or close a business; sign business documents; hire managers or advisors.
• Investment transactions: buy and sell stocks, bonds, mutual funds, and other securities; hire and fire brokers or investment advisors.
• Tax matters: prepare, sign, and file tax returns; receive tax information; negotiate with tax authorities.
• Government benefits: apply for and manage benefits (Social Security, Medicare/Medicaid) to the extent permitted by federal program rules; note that some benefit programs limit how a private agent may handle funds and may require a different legal arrangement (e.g., representative payee for Social Security or a conservatorship for certain public benefits).
• Insurance and claims: manage claims, settle insurance matters, and pay premiums.
• Personal property: buy, sell, insure, and dispose of personal property (vehicles, household items, collectibles).
• Gifts and transfers: many POAs allow the agent to make gifts or transfer assets, but states often recommend clear, specific language if gifting power is intended. You should be cautious: broad gifting authority can be abused or challengeable after the fact.

Limits and Restrictions

The principal decides the scope of powers in the document. Typical limits include:

• Specific prohibitions (for example, no authority to gift more than X dollars or to sell particular property).
• Time limits or expiration dates.
• Requiring co‑agents to act jointly (both must sign) or allowing them to act independently.
• Excluding power to revoke trusts or change beneficiary designations.

Agent Duties and Legal Standards

When an agent acts under a South Dakota POA, they generally owe fiduciary duties to the principal. Those duties typically include:

• Acting loyally and in the principal’s best interests.
• Avoiding conflicts of interest.
• Keeping accurate records and receipts for transactions.
• Not misappropriating or wasting the principal’s assets.

If an agent violates these duties, they may face civil liability and be required to repay losses or face removal by a court.

Practical Steps to Make a POA Work

1. Use clear, specific language about powers and whether the document is durable.
2. Notarize the document and include any required witness statements. Many banks and title companies expect notarization; some require witnesses.
3. Record the POA if it will be used for real estate transactions in the county where the property is located.
4. Give copies to your bank, financial institutions, advisor, and the chosen agent(s). Keep the original in a safe but accessible place.

Where to Find the Law in South Dakota

South Dakota’s statutes and any state requirements or formalities can be found on the South Dakota Legislature’s website. For South Dakota statutes related to powers of attorney and related procedural rules, search the codified laws for references to “power of attorney” here: South Dakota Codified Laws – search: power of attorney.

For the model document and explanations from the national perspective, you can also review the Uniform Power of Attorney Act text maintained by the Uniform Law Commission: Uniform Power of Attorney Act. Use that as a reference but confirm South Dakota’s specific statutory language and local practice with a South Dakota-licensed attorney.

Helpful Hints

• Choose an agent you trust who can communicate clearly and keep records.
• Consider naming a successor agent in case the first agent cannot serve.
• Specify powers you want to allow and those you want to prohibit; broad forms may create unintended authority.
• Decide whether the POA should be durable (works during incapacity) or springing (only upon a triggering event).
• Notarize and, if applicable, have witnesses sign—many institutions require these steps to accept the POA.
• Record the POA for any real estate matters to prevent title or closing delays.
• For public benefits (Medicaid, VA benefits), check program rules—using a POA to move funds may affect eligibility; an attorney can advise on asset protection and benefits planning.
• Review your POA periodically and update it after major life events (marriage, divorce, moving, new children, significant asset changes).
• If you worry about abuse, consider limiting gifting powers, requiring dual signatures, or using a trust or conservatorship instead for long-term oversight.
• When in doubt, consult a South Dakota attorney experienced in elder law, estate planning, or real estate for tailored advice and to draft a POA that meets your goals and state requirements.