What is a power of attorney?
A power of attorney is a legal document in which a person (called the principal) delegates legal authority to another person (called the agent). The power of attorney gives the agent authority to make decisions for the principal in financial, property, and legal matters. Most states specify the proper legal form for a power of attorney, and some legislatures have approved statutory forms for powers of attorney. Generally the principal's signature on a power of attorney form must be witnessed by a Notary Public.
Are there different types of powers of attorney?
There are three basic types of powers of attorney: nondurable, durable, and springing. A nondurable power of attorney is a power of attorney given to an agent to handle a specific transaction, such as the sale of real estate. A durable power of attorney permits the agent to act on behalf of the principal until the principal revokes the power or until the principal's death. Durable powers of attorney continue in effect even if the principal becomes incompetent (unable to conduct his or her own affairs). A springing power of attorney becomes effective at a future date when a specific event occurs, such as the principal's illness or disability. A springing power of attorney is effective until the principal's death or until it is revoked by a court.
Who should be appointed as agent under a power of attorney?
Under a power of attorney, the agent has legal authority to act on behalf of the principal regarding the principal's personal and financial affairs. Consequently, a trustworthy person should be selected to serve as agent. Generally, the best choices for agents are a close family member, a trusted friend, or a professional.
Can multiple agents be appointed?
It is possible to appoint multiple agents. The principal can require the agents to act jointly in making any decisions involving the principal's affairs or can permit them to act separately.
What is the agent's legal authority under a power of attorney?
The principal can continue to act while legally competent to make decisions, and the agent can only perform the duties specified by the principal. Under a power of attorney, the agent may be given legal authority to buy or sell the principal's real estate, manage the principal's property, and handle the principal's bank accounts. The agent can also make gifts on behalf of the principal, deal with the principal's tax issues, make legal claims, and supervise litigation.
What are the agent's duties to the principal?
The agent is the representative of the principal and is required to act in the best interest of the principal. The agent is a fiduciary of the principal and must maintain standards of honesty, loyalty, and fairness to the principal. The agent must keep the principal's property separate from the agent's own property and must maintain separate bank accounts for the principal's assets. The agent is also required to keep financial records of any activity on behalf of the principal and to provide an accounting of the principal's property.
Is it possible to revoke a power of attorney?
The principal can revoke a power of attorney at any time by informing the agent of the revocation in writing. A power of attorney also can be revoked if the agent fails to act in the best interest of the principal.
Copyright 2012 LexisNexis, a division of Reed Elsevier Inc.