People who act in bad faith often are not villains. Often people who act in bad faith are good people with good intentions and the wrong perspective.
A financial power of attorney requires trust in the individuals appointed to serve as agents. Oftentimes agents are thrown in unexpectedly to help with bill payments, check mail or email, manage a home, and run errands. We want to help prevent unintentional bad acts. In order to do that, we offer classes for power of attorney agents so that they can understand better how to act with the right perspective.
Did you know that the agent’s job comes with certain duties like to duty of good faith? What does that even mean – “good faith”?
Black’s Law Dictionary 7th Edition (yes this is the copy I bought in law school) defines good faith as “a state of mind consisting in (1) honesty in belief or purpose, (2) faithfulness to one’s duty or obligation, (3) observance of reasonable commercial standards of fair dealing in a given trade or business, or (4) absence of intent to defraud or to seek unconscionable advantage.”
That definition is pretty intense. But generally, I believe we would all agree if we were serving as agent for someone else that we would seek to be faithful in our duty and honest as well and that we would not seek to defraud or take advantage of someone in our role as agent.
Let’s take a look at the definition of “bad faith” to compare. Black’s dictionary defines bad faith as “dishonesty of belief or purpose and the Restatement of Contracts Section 205 comment lists several examples of types of bad faith cited in judicial decisions: (1) evasion of the spirit of the bargain, (2) lack of diligence and slacking off, (3) willful rendering of imperfect performance, (3) abuse of a power to specify terms, and (4) interference with or failure to cooperate in the other party’s performance.
Slacking off seems like something a lot of us may do from time to time and could be defined differently be people with differing perspectives. What is slacking off to one person could be just taking my time to another person. What would your principal expect? The principal is the person who signs the power of attorney and gives authority to the agents. It’s the principal’s wishes and time frames the agent should be abiding by. If you, as agent, are running to the store to purchase a birthday gift for a grandchild, then good faith exercised by you would look like the same thing the principal would do. The agent would use the same budget and same purpose (maybe the principal always loves to buy something educational and not just entertaining).
What about “evasion of the spirit of the bargain”? What if you are agent for your mom and she wanted to sell her home to her friend for a price under market value because they had been going through some medical challenges and needed a place for a lower price. She’s decided to move to an assisted living and, while preparing to move, she hurt her back. Now, you, as agent, become a part of the arrangements to sell her home because she simply can’t get around as easily. You change the deal.
You want mom to receive fair market value. She worked hard all of her life. She shouldn’t be giving so much money away to let a friend have the house. You tell the friend that the deal has changed. You counter offer with the fair market value. The friend can’t afford that and politely declines clearly disappointed. You end up selling to a third party. Later your mom finds out that you changed the deal and her friend could not purchase the home. Did you evade the spirit of the bargain? I would say that you did.
Remember that it is your job as agent for mom (in this example) to follow her instructions or what she would want first (unless it’s illegal, obviously), then to do what she would want looking to written instructions she has left behind, then to do what is in her best interest. In doing your job as agent, you are acting according to her perspective and what she would want. Think of the situation like putting on sunglasses tinted blue. When you look through the glasses, everything looks a little different because it is all tinted blue. Acting as agent is very similar in that you must put yourself in the shoes of the principal or the person on whose behalf you are acting and ask yourself what they would do. Avoid being the person who has good intentions and the wrong perspective.
Learn more about your duties as an agent under power of attorney by joining us at the POA 101: Power of Attorney Agent Essentials 101 on September 10th, 2026 from 6:30pm to 7:30pm. We will have a workbook and best practice recommendations to help ensure that each participant can be successful as agents for their friends and loved ones. Sign up by clicking on the link below.
