New York Law (NYLE) Practice Exam

Under a duly executed power of attorney, an agent must:

1. Act in their own best interest at all times.

2. Follow the instructions of the principal without exception.

3. Observe the standard of care of a prudent person dealing with the property of another.

4. Only execute decisions that benefit the principal themself.

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

The correct answer is based on the fiduciary duty that an agent has under a power of attorney. When an agent is appointed under a duly executed power of attorney, they are entrusted with the authority to act on behalf of the principal. This relationship entails a responsibility to manage the principal's affairs with a high standard of care, which is generally defined as the standard of a prudent person dealing with their own property. This means the agent must act with the diligence and caution that a reasonable person would exercise in managing their own financial interests, ensuring that the principal's property is handled responsibly and with attention to detail. The agent is expected to prioritize the principal's interests and needs, making prudent decisions that reflect this standard of care. In contrast, the other options do not accurately reflect the legal obligations of the agent. Acting solely in their own best interest undermines the fiduciary relationship, while following the principal's instructions without exception may ignore the necessity of exercising judgment and care. Lastly, only executing decisions that directly benefit the principal does not encompass the broader responsibility to manage and protect the principal’s property overall, which involves making reasonable choices that may not always appear to be in the principal's direct benefit at that moment.