What is a Power of Attorney?
What is a Power of Attorney?
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Power of Attorney (POA) is a written authorization to act or represent on behalf of another in business, legal matters or private affairs.
The person who gives the authority to for the other person to act on his behalf is the donor, grantor or principal. The one who has received the authority is the agent or the attorney-in-fact. Previously, a power refers to an instrument under seal and letter refers to an instrument under hand. Presently, both of these are signed by the grantor and have no more variation.
The term attorney-in-fact refers to the agent authorized by the principal to act on his behalf. The law requires the attorney-in-fact or the agent to be loyal and honest to the principal. It should not be confused with the term attorney-at-law or someone who are licensed to practice law in his jurisdiction.
Capacity of a Grantor
A principal or grantor can make a Power of Attorney only if he or she has the essential mental capacity. If the grantor happens to lose his or her capacity to grant permission due to injury, sickness, or mental capacity, the power of attorney is not valid. A durable power of attorney, on the other hand, refers to the situation where the grantor states in the power of attorney that it will still be in effect even if the grantor is incapacitated. If no power of attorney has been created by the grantor, another party can act on their behalf by asking the court to impose a conservatorship or guardianship.
Power of Attorney may be oral or written depending on the jurisdiction. If witness will hold up in court, then the power of attorney is the same as written. The law usually requires power of attorney be in writing depending on its purpose. The International Revenue Service, hospitals, banks, even nursing homes requires power of attorneys to be in written form before they will honor it.
Execution
Power of attorney is considered a legal document if it is signed and dated at a minimum by the grantor. However, if the document is challenged by a third party, this would not be sufficiently legal. A document that is reviewed and signed or stamped by a notary public can withstand such challenge. In some states, a power of attorney is considered valid if signed by the principal, agent and two other witnesses or a notary public.
Durable power of attorney. The power of attorney is still effective even if the principal later becomes incapacitated. This is also known as power of attorney with durable provisions or enduring power of attorney.
Health care power of attorney. This document provides the attorney-in-fact the power to make health-care decisions for the grantor that may include terminating care or life support. This is also known as "health care proxy".
Springing power of attorney. This is document that can only take effect if the grantor is incapacitated. After the incapacitation, the power is identical to durable power of attorney. This is the power that can allow a spouse to manage the affairs of grantor in cases like injury or illness and the grantor can no longer act.