New York Law (NYLE) Practice Exam

What is an agent required to do under a duly executed power of attorney?

1. Act according to the agent's own judgment regardless of instructions

2. Observe the standard of care of a prudent person with another's property

3. Comingle funds with those of the principal if records are maintained

4. Make gifts to herself, regardless of any established limits

The correct answer is: Observe the standard of care of a prudent person with another's property

An agent under a duly executed power of attorney has a fiduciary duty to act in the best interests of the principal and to manage the principal's assets responsibly. One key aspect of this responsibility is to observe the standard of care of a prudent person when dealing with another's property. This means that the agent must exercise reasonable care, skill, and diligence when handling the principal's affairs, similar to how an individual would manage their own property. The requirement to uphold this standard helps to ensure that the agent acts in a manner that protects and preserves the principal's assets. This responsibility reflects the trust placed in the agent by the principal and aims to prevent any potential mismanagement or misuse of the principal's resources. Other options outlined do not align with the duties imposed on an agent. Acting solely based on personal judgment disregards the responsibility to follow the principal's instructions. Commingling funds without strict adherence to legal standards violates fiduciary duties, and making personal gifts that exceed the principal's established limits would be a breach of trust and potentially illegal. Thus, recognizing the standard of care required is crucial in understanding the agent's role under a power of attorney.