Power of Attorney Law & Legal Definition


A power of attorney is an instrument containing an authorization for one to act as the agent of the principal that terminates at some point in the future either by its terms or by operation of law such as death of the principal or agent. They are also called letters of attorney. The person appointed is usually called an Attorney-in-Fact. A power of attorney which doesn't provide for a successor attorney-in-fact to be appointed will terminate at the death of the attorney-in-fact. The person making the power of attorney appointment is called the principal. A power of attorney can be either general, durable or limited. Some states have adopted a statutory power of attorney. Other specific types of power of attorneys include: Health Care Power of Attorney, Power of Attorney for Care and Custody of Children, Power of Attorney for Real Estate matters and Power of Attorney for the Sale of a Motor Vehicle. Power of attorney requirements vary by state, but typically are signed by the principal and need to be witnessed and notarized.

State laws vary, but generally, a power of attorney must be complied with unless the person to whom it is directed has reasonable cause to doubt the authority of the agent. In some cases, a specific power of attorney addressing the authority of the agent in a particular transaction may be required.

For a power of attorney to be coupled with an interest, so as to be irrevocable, there must be a specific, present and coexisting interest in the subject of the power or agency. Whether such an interest exists in any particular case is to be determined from the entire agreement between the parties. The mere expression, 'a power coupled with an interest', does not necessarily render the power irrevocable. The interest which the attorney in fact must have in the subject of the power in order to render the power irrevocable is such a beneficial interest in the thing itself, apart from the proceeds that if the power were revoked he would be deprived of a substantial right. In other words, the relation of the attorney in fact to the subject-matter must be such that a revocation of the power would be inequitable.

Laws on amendments to a power of attorney vary by state and power of attorney. For example, in some states, a durable power of attorney may be changed only by executing a new durable power of attorney or executing an amendment with the same formalities as the original power of attorney. Free law summaries provide a detailed explanation of state specific law concerning the power of attorney.

FAQs

1) What is a General Power of Attorney?

A General Power of Attorney is a legal document which gives the person you choose (the agent) the power to manage your assets and financial affairs while you are alive. The document must be signed by you (the principal) while you have the required legal capacity to give your agent clear and concise instructions. The appointment may be for a fixed period and can be revoked by you at any time providing you still have the legal capacity to do so. A power of attorney ceases when you die. The executor named in your will then takes over the responsibilities of your estate.

2) What is a Durable Power of Attorney?

A "durable" power of attorney stays valid even if you become unable to handle your own affairs (incapacitated). If you don't specify that you want your power of attorney to be durable, it will automatically end if you later become incapacitated.

3) What is a Limited Power of Attorney?

A limited power of attorney allows the principal to give only specific powers to the agent. The limited power of attorney is used to allow the agent to handle specific matters when the principal is unavailable or unable to do so.

4) What is a Statutory Power of Attorney?

A statutory power of attorney is a power of attorney that copies the language in a state statute which includes an example of a form that may be used. For example, a durable power of attorney may also be a statutory power of attorney if it copies the language in the state durable power of attorney statute. State laws vary, but the states that have adopted a statutory form of power of attorney typically allow for other language to be used as long as it complies with the state law.

5) Why have a Power of Attorney?

When accidents, sudden illness, planned or unexpected absences occur, or when you just can't cope, you may need someone to manage your financial affairs. It can be done in anticipation of a future need, for a special purpose or for a limited time. The person you appoint is called your agent. The agent will (by your instructions) safeguard and manage your assets and financial affairs if you are unable to manage them for yourself or if you lose legal capacity.

6) Must a Power of Attorney be recorded?

Please refer to the state specific law summary to determine if a particular Power of Attorney must be recorded. Usually, most Power of Attorney forms do not need to be recorded. However, Power of Attorneys dealing with the sale and purchase of real estate must be recorded.

7) Can a Power of Attorney be revoked?

A Power of Attorney can be revoked by the principal at any time, as long as he or she is competent.

The following is an example of one state's law dealing with powers of attorney:

Reliance on agency.

Any person who acts in good faith reliance on a copy of the agency will be fully protected and released to the same extent as though the reliant had dealt directly with the principal as a fully-competent person. The agent shall furnish an affidavit to the reliant on demand stating that the instrument relied on is a true copy of the agency and that, to the best of the agent's knowledge, the principal is alive and the relevant powers of the agent have not been altered or terminated; but good faith reliance on the agency will protect the reliant without the affidavit. Any person dealing with the agent may presume, in the absence of actual knowledge to the contrary, that the agency was validly executed, that the principal was competent at the time of execution, and that, at the time of reliance, the principal is alive, the agency and the relevant powers of the agent have not terminated or been amended, and the acts of the agent conform to the standards of this Act. No person relying on the agency shall be required to see to the application of any property delivered to or controlled by the agent or to question the authority of the agent. Each person to whom a direction by the agent in accordance with the terms of the agency is communicated shall comply with that direction, and any person who fails to comply arbitrarily or without reasonable cause shall be subject to civil liability for any damages resulting from noncompliance. A health care provider who complies with Section 4-7 [755 ILCS 4$/4-7] shall not be deemed to have acted arbitrarily or without reasonable cause.