Explanation of Power of Attorney
An attorney is someone who represents you, the principal, in legal matters. A professional lawyer, also called an attorney at law, has gone through extensive training in the law that enables her to be an effective advocate for your interest. But, you can designate anyone, not just a professional lawyer, to act on your behalf in most legal affairs. A power of attorney document doesn't make someone a lawyer, and it doesn't allow her to represent anyone else in court, but it does give the power to act on your behalf in particular situations.
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Identification
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A power of attorney is a document by which you designate another (the agent) as your attorney in fact. As attorney in fact, the agent is able to make decisions and act on your behalf in the situations stipulated in the power of attorney. The essential elements of a power of attorney, then, are the identification of the parties, the enumeration of powers, and the listing of any limitations or specific instructions from you to the agent. A power of attorney must be signed and notarized in the manner prescribed by state law.
Types
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There are many types of powers of attorney. A general power of attorney grants fairly broad authority to the agent over a wide range of areas. If you want to empower the agent in only a limited capacity, you can create a limited power of attorney, which is narrowly tailored. For example, a medical power of attorney gives the agent the ability to authorize medical treatments and make other health care decisions, but does give access to bank accounts, real estate or other areas. Most states have a form called a statutory power of attorney that makes granting a power of attorney, whether general or limited, easier.
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Features
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Unless specifically stipulated otherwise, a power of attorney automatically ceases if the you become incapacitated, meaning if you are rendered persistently unconscious, physically unable to communicate or mentally unfit to manage your affairs. Because power of attorney is derived from the consent of the principal, and because consent cannot be implied when you are incapacitated, a power of attorney must be expressly durable, meaning it persists by your intent, even after you are incapacitated. A power of attorney that only comes into effect upon a precedent condition, such as incapacitation, is said to be "springing."
Function
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You might want to give power of attorney to someone else for several reasons. In many cases, it's simply a matter of convenience. Where the agent has more expertise in a particular field, say managing stocks or real estate, you might grant power of attorney rather than reviewing each individual decision. The other major reason for a power of attorney is for estate planning, where you specifically contemplate the medical treatment you want to receive if you are seriously injured and unable to communicate. A power of attorney can also authorize the management of assets in the event of your incapacitation.
Considerations
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Most powers of attorney are revocable, meaning you can take away the powers at any time. This is usually either done through a separate revocation document, or by inclusion in the original power of attorney of a termination date or condition. The obvious exception to this is the irrevocable power of attorney, which can only be revoked through an agreement between you and the agent. This considerable power is given infrequently as either part of a contractual obligation or as security for a loan.
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