Power of Attorney Rules

By David Carnes

A power of attorney is a legal relationship in which one person (the principal) grants another party (the agent) the authority to perform legal acts on behalf of the principal. Although third parties are not obligated to honor a power of attorney, they are protected from legal liability if they do honor it. Powers of attorney are regulated under state law.

Creation

A power of attorney is created when the authorization form is drafted and signed in accordance with state law. The form must include the names and addresses of the principal and the agent, a description of the powers granted, some indication of its duration, and the signature of the principal. Some states also require the agent to sign the form. All signatures must be either notarized or witnessed, and the notary or witnesses must sign the form. The agent must use the original power of attorney form; a photocopy is not valid.

Types

A power of attorney may be classified as general or limited. A general power of attorney authorizes the agent to perform any legal act that the principal could perform himself. A limited power of attorney authorizes the agent to perform only specified legal acts. A power of attorney may also be classified as durable or nondurable. A durable power of attorney remains valid even if the principal becomes incapacitated (mentally incompetent, unconscious or unable to communicate), while a nondurable power of attorney automatically expires when the principal becomes incapacitated. A power of attorney may also be classified according to the nature of the authority granted: a medical power of attorney, for example, or a financial power of attorney.

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Typical Uses

A financial power of attorney might authorize an agent to withdraw money from the principal's bank account, pay bills, sign a contract, settle an insurance claim, purchase real estate or file a tax return. A medical power of attorney might authorize the agent to consent to medical treatment, select a treatment from available options, issue a Do Not Resuscitate Order or refuse treatment on religious grounds.

Revocation

All states allow the principal to revoke a power of attorney at any time, as long as he is mentally competent and able to communicate. The agent might still act on behalf of the principal even after the revocation, however, if he presents the power of attorney form to a third party who has no reason to know of the revocation. The agent might, for example, withdraw money from the principal's bank account on the strength of a revoked power of attorney. In this case the bank would not be obligated to return the money, but the principal would be entitled to sue the agent.

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Power of Attorney Rights

References

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What Protects Families From Power of Attorney Abuse?

A power of attorney is a legal status that grants an individual powers to make financial or health decisions on behalf of another person. The person granting the power of attorney is the principal and the individual receiving the powers is the agent. Agents are required to act in the best interests of the principal; however, it is not uncommon for agents to take advantage of the situation by stealing money or unlawfully selling property. It may be possible to safeguard against this situation by using specific language in the power of attorney document or by appointing more than one power of attorney. If the damage has already been done, there are civil and criminal sanctions available.

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A power of attorney is a legal status given to an agent by a principal. Under a power of attorney, an agent is able to engage in legally binding conduct on behalf of the principal including buying and selling real estate, making investments, managing assets or entering into contracts. If the agent takes advantage of his power of attorney, he could face civil penalties including restitution of lost money or a judgment for damages and fees. Conduct amounting to a crime could result in incarceration or significant criminal fines.

Can a Power of Attorney Have a Debit Card?

A power of attorney is a legal document you can create to name another person to act in your place. Powers of attorney are both helpful and dangerous, depending on the integrity of the person named as your agent. A general power of attorney confers broad powers, including the right to access bank accounts with debit cards.

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