What Is an Irrevocable Power of Attorney?

By Jennifer Kiesewetter, J.D.

What Is an Irrevocable Power of Attorney?

By Jennifer Kiesewetter, J.D.

A power of attorney legally assigns someone the ability to make decisions on behalf of the person granting the authority. Unlike a revocable power of attorney, an irrevocable power of attorney cannot be revoked, except in rare circumstances.

Two men signing paperwork at a table together

The person who assigns legal authority to someone else is called a principal. Principals often use irrevocable powers of attorney in business transactions. They can customize a power of attorney to reach specific business goals, such as limiting the decision-making power to one transaction. Irrevocable powers of attorney are used in several different types of business relationships, such as real estate transactions, shareholder voting, or contract formation.

Parties and Powers

An irrevocable power of attorney defines the principal and the person who can make decisions on their behalf, called the agent. Additionally, the power of attorney describes the exact decision-making powers granted to the agent, including any limitations to their authority.

For example, a power of attorney can define an agent's authority over the decision to purchase a favorite house on a specific street. If you're selling some investments, as the principal, you can limit the power of attorney to a specific type of stock or bond. If a shareholder knows they are unable to attend a corporate meeting, then they can grant a specific power of attorney to another shareholder to vote on their behalf. The principal can craft the scope of the decision-making power intentionally to achieve the business purpose.

Courts may grant an irrevocable power of attorney in cases involving guardianship over children, in which the proposed guardian may live out of state away from the children. Additionally, an irrevocable power of attorney may assign medical treatment decisions to an agent.

State laws govern irrevocable powers of attorney and their functions. To determine how and when to use them, be sure to check your state laws before assigning decision-making powers over to an agent.

Duration

Typically, a principal grants an irrevocable power of attorney during his or her life. These don't usually extend beyond the death or incapacity of the principal. However, the document can include a sunset provision. This ends the agent's authority at a particular time or after a specific event.

If the principal becomes insolvent, disabled, or dies, the irrevocable power of attorney ends. Furthermore, a power of attorney ends if the agent dies, becomes incapacitated, or files bankruptcy, unless the principal provides otherwise within the document.

Revocation

Generally, neither the principal nor the agent can cancel an irrevocable power of attorney. However, in rare circumstances, the document can be voided if the principal proves that the agent is not acting in their best interest. Even if the principal establishes a failure to act, they need to go to court to void the agreement.

Although a principal can use irrevocable powers of attorney in certain business transactions, this use is rare. Before implementing an irrevocable power of attorney, you may have questions about your state's requirements. You should consult with an attorney or use an online service provider to answer any questions you may have. By receiving additional guidance, you can assign decision-making powers with confidence, knowing you sought sound legal advice before proceeding.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.