What Does Power of Attorney Do?
Power of attorney gives one person, called an agent, the authority to transact certain legal business on behalf of the authorizing person, who is called the principal. Power of attorney allows a principal to ensure that business is taken care of when the principal cannot be present. A special power of attorney for health care also allows the principal to name an agent to make medical treatment decisions when the principal is unable to communicate due to illness or injury.
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History
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Power of attorney under ancient common law is a very limited legal concept. A principal could authorize an agent to act on his behalf (the principal being almost always male, as women had very few legal and property rights) only when the principal was himself fully competent to act, but could not be physically present for the transaction. For example, a farmer who needed to remain harvesting crops or milking cows could send an agent with a power of attorney into town to purchase a piece of land or sign a contract on his behalf. If the farmer became incapacitated or died before the transaction was complete, the power of attorney became void at that same moment.
Function
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Today most general power of attorney cases remain as limited as they were under common law, for the protection of the principal. A principal can authorize an agent to engage in specifically listed legal transactions on the principal's behalf, for as long as the principal remains legally competent to engage in such transactions on his or her own.
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Common Uses
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The most common uses of power of attorney are to authorize someone else to sign real estate documents when the principal can not be physically present for the closing, or to authorize a family member to engage in banking transactions or paying bills for an elderly relative for whom the task has become difficult. Another common use of powers of attorney is to authorize a spouse or other trusted agent to handle all banking and other legal matters for a person who is overseas serving in the armed services, or on another extended time away from home like studying abroad.
Misconceptions
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An agent under a power of attorney is not authorized to make any decisions or on behalf of the principal. The agent is only authorized to engage in the actions specifically stated within the power of attorney document. Powers of attorney do not continue in effect after the principal becomes incapacitated, except for an enduring or durable power of attorney if authorized by statute. All powers of attorney terminate on the principal's death, at which point the the executor under the principal's will, or named by a probate court, is authorized to carry out the legal business of the principal's estate.
Special Types
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Most state statutes now allow a principal to prepare an enduring, or durable, power of attorney for health care. This power of attorney is an exception to the rule regarding powers of attorney becoming void when the principal is incapacitated. A health care power of attorney allows the agent to make medical treatment decisions for the principal when the principal is unable to communicate his or her wishes due to illness or injury. Some states also have specific rules requiring real estate powers of attorney to be executed with particular legal formalities and filed in the land records.
Protection of Principal
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Limits on powers of attorney are intended to protect the principal from being defrauded by an unscrupulous agent. Powers of attorney leave legal authority in the hands of the principal, who can include an expiration date on any powers granted the agent, or revoke those powers at any time.
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References
Resources
- Photo Credit Cindy Hill
