Understanding Power of Attorney

Introduction

A Power of Attorney (POA) is a legal document that authorizes an individual to act on behalf of another person in financial and legal matters. It is a useful tool for those who are unable to manage their affairs due to illness, disability, or other circumstances. However, granting a special Power of Attorney comes with important considerations and responsibilities that must be understood before making this decision. In this article, we will explore the key aspects of Power of Attorney and the important considerations that should be kept in mind when granting the POA.

What is Power of Attorney?

A Power of Attorney (POA) is a legal document that authorizes one person (referred to as the “agent” or “attorney-in-fact”) to act in the financial, legal, and occasionally healthcare concerns of another person (referred to as the “principal”). The principal may grant the special Power of Attorney for various reasons, such as age, illness, disability, or the need for assistance in managing their affairs.

Types of Power of Attorney

There are three types of Power of Attorney:

1. General Power Of Attorney: Authorizes an individual to act on behalf of another person in all financial and legal matters.
2. Limited Power of Attorney: Limited Power of Attorney authorizes an individual to act on behalf of another person in specific matters only, such as the sale of property or management of a business. You can create a limited power of attorney yourself, but it is a good idea to have an attorney help you.
3. Healthcare Power of Attorney: Authorizes an individual to make medical decisions on behalf of another person if they become incapacitated.

Important Considerations

Here are some important considerations to be made before authorizing the Special Power of Attorney:

1. Choosing the Right Agent: The attorney you choose should be someone you trust and who has the skills and knowledge necessary to manage your affairs. Before granting the POA, it’s essential to go over the duties and expectations of the position with the representative.
2. Understanding the Scope of Authority: The POA’s authority should be precisely specified. The agent should refrain from carrying out any actions that are outside of the scope of the POA and should only operate by the authority conferred.
3. Revocation of the Power of Attorney: If the person granted the POA is competent to do so, they have the right to do so at any moment. It is important that you understand the steps involved in canceling the POA and promptly inform all parties who are affected.
4. Liability: The agent operating by the POA is accountable for their deeds and may be held liable for any harm they may have caused. Selecting a trustworthy and accountable agent is important.
5. Competence: At the moment the POA is granted, the person giving it must be competent. It is of the utmost importance to get legal advice if there are any doubts regarding their competency so that the POA is appropriately issued.
6. Disclosure: Upon request from the person granting the POA, the agent must provide the person with the POA with a copy of all correct records of all financial and legal transactions.

Bottom Line

POA is a useful tool for those who are unable to manage their affairs due to illness, disability, or other circumstances. However, granting a POA comes with important considerations and responsibilities that must be understood before making this decision. Choosing the right agent, understanding the scope of authority, and being aware of the potential for liability are all important considerations when granting a Power of Attorney. It is important to consult with legal and financial professionals to ensure that the POA is granted properly and that all relevant parties are informed of the decision. With proper planning and consideration, a POA can provide peace of mind and ensure that affairs are managed properly.