A power of attorney is a legal document that gives another person the legal authority to make decisions for the signer, or principal. The person who has the authority to make decisions is called the “agent” or the "attorney-in-fact”. The power of attorney document can be drawn up to give the agent authority over different things. For example, the power of attorney may only come into force if the signer is incapacitated, or it may give the agent authority to make only specific financial decisions.
There are many different types of power of attorney. A general financial power of attorney allows the agent to carry out business transactions on behalf of the principal. A durable financial power of attorney allows the agent to make decisions when the principal is incapacitated. A health care power of attorney allows the agent to make health care decisions for the principal. A limited power of attorney allows the agent to make decisions only in certain circumstances, such as allowing a child care provider to make decisions about health care in the absence of the parents. A springing power of attorney comes into effect only if a stated event occurs, such as a death.
The agent can be any person over the age of 18 the principal chooses. The agent does not have to be an attorney. The agent is in a fiduciary position, which means that he has a legal obligation to act in the principal's best interests. The agent is also required to keep his money in a separate account from the principal's money, to keep records of all transactions and not to profit in transactions where he is representing the principal. The agent may be paid for his work, especially if he is conducting substantial financial business for the principal, such as running a company. Details of pay are generally set out in the power of attorney.
Creating the Document
You can purchase forms for different types of power of attorney at stationery or office supply stores, or you can ask an attorney to draft the form for you. In order for the power of attorney to be legally binding, the principal must be mentally competent — he must understand the types of decisions and powers he is giving to the agent. The principal must sign the power of attorney form in the presence of a notary public. If the agent will be handling property for the principal, such as selling or renting property, the power of attorney form should also be recorded with the Registry of Deeds, in the county court where the property is located.
A power of attorney can be revoked at any time, as long as the principal is mentally competent and understands what she is doing. The power of attorney must be revoked in writing. The principal does not need a special form for this. She can simply write a document stating her name, the date, that she is of sound mind, the name of the agent, the date the original power of attorney came into effect and her wish to revoke the power of attorney. The principal must sign this document. A power of attorney also automatically ends on the principal's death. In some states, such as Texas and California, if a spouse is the agent, the power of attorney is automatically revoked on divorce. A court can also revoke a power of attorney if it finds there was fraud or that the principal was not of sound mind when granting the power.
References & Resources
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