A Power of Attorney is a legal document in which one person, known as the principal, delegates legal authority to another person, known as the agent, authorizing the agent to act on the principal’s behalf. The agent is also known as an “Attorney-in-fact”.
The power of attorney must be executed by the principal. All of the terms and conditions of the agent’s authority should be set out in the document.
A Power of Attorney can be very specific. For example, a power of attorney could authorize the agent to sell a specific vehicle on behalf of the principal. A Power of Attorney may also be general, allowing the agent to perform numerous acts on behalf of the principal.
Unless otherwise agreed between the principal and agent, a power of attorney is revocable. It can be revoked at will by the principal, on a certain specified date, or upon the occurrence of a certain event. In some cases, a principal may be contractually prohibited from revoking a power of attorney.
The principal can provide in the power of attorney that it is only become effective on a certain specified date, or upon the occurrence of a certain event. For example, the document could provide that it is only effective upon the incapacity of the principal. This is referred to as a “springing power of attorney”.
The Power of Attorney may be durable, which means that it remains effective, even upon the disability of the principal. This can be very helpful, in that it can allow the agent to handle the affairs of someone that may be otherwise incapacitated due to injury, illness or infirmity. A durable power of attorney may be sufficient to avoid the appointment of a guardian in the event of the principal’s incapacity. A power of attorney, however, can only be executed by a competent individual. So, the document is not helpful to an individual that did not execute the power of attorney prior to becoming incapacitated.
The agent under a Power of Attorney is acting as a fiduciary. As such, the agent must act in the principals best interest at all times. An agent will be legally liable to the principal if the agent acted in their own best interest to the detriment of the principal.
Likewise, the Power of Attorney does give the agent any authority over the principal. It does not authorize the agent to prevent a competent principal from taking any action with regard to the principal’s property or business. It also does not authorize the agent to handle the principal’s property contrary to the principal’s wishes.
A broad power of attorney can authorize an agent to perform nearly any act which could be legally performed by the principal. There are some exceptions. Even though an individual may represent themself in court, An agent may not represent the principal in court based on the authority of a power of attorney.
Since a power of attorney can be a complicated legal document, it should be executed after consultation with an attorney as to all of the relevant implications.
Thank you for your interest in these articles. Please remember that these articles are designed to provide general legal information and may not apply to specific legal situations. Legal matters can be complicated by issues outside of the scope of our articles. Publishing these articles does not constitute legal advice on the part of Davis McCown, Attorney at Law. Neither review of any article, nor use of the information provided, constitutes an attorney/client relationship. It is recommended that all estate planning documents and decisions be discussed with a qualified attorney.