Power of Attorney
What is a Power of Attorney?
A Power of Attorney is a document whereby one person confers on another the right to act on his behalf and in that respect the attorney can act just as though he or she were the donor of the power. Such a power can be used, for instance, to operate bank accounts or to sign documents or deeds.
A Power of Attorney is a legal instrument that is used to delegate legal authority to another. The person who signs (executes) a Power of Attorney is called the Principal. The Power of Attorney gives legal authority to another person called an Agent or Attorney-in-Fact to make property, financial and other legal decisions for the Principal.
A Principal can give an Agent broad legal authority or limited authority. The Power of Attorney is frequently used in legal transactions where the principal cannot be present to sign necessary legal documents.
Are there different types of powers of attorney?
There are Non Durable and Durable Power of Attorney. A Non Durable Power of Attorney takes effect immediately and remains in effect until it is revoked by the Principal, or until the Principal becomes mentally incompetent or dies.
A Non Durable Power of Attorney is often used for a specific transaction, like the closing on the sale of property, or the handling of the Principal's financial affairs while the Principal is away.
A Durable Power of Attorney enables the Agent to act for the Principal even after the Principal is not mentally competent or physically able to make decisions. The Durable Power of Attorney may be used immediately, and is effective until it is revoked by the Principal, or until the Principal's death.
What kinds of legal authority can be granted with a Power of Attorney?
A Power of Attorney can be used to grant any, or all, of the following legal powers to an Agent:
- Buy, sell or manage your property
- Conduct your banking transactions
- Invest, or not invest, your money
- Make legal claims and conduct litigation
- Attend to tax and retirement matters
How do I select an Agent for a Power of Attorney?
You should choose a trusted family member, a proven friend, or a professional with a reputation for honesty.
Can I appoint more than one Agent in a Power of Attorney?
You may appoint multiple agents. If you appoint two or more agents you must decide whether they should act together in making decisions involving your affairs, or whether each can act separately.
There are advantages and disadvantages to both forms of appointment. Requiring your agents to act jointly can safeguard the soundness of their decisions. On the other hand, requiring agreement of all your agents can result in delay or inaction in the event of a disagreement among them, or the unavailability of one of them to sign legal documents.
Allowing your agents to act separately may ensure that an agent is always available to act for you, although it may result in confusion and disagreements if the agents do not communicate with one another, or if one of them believes that the other is not acting in your best interests.
Once I sign a Power of Attorney may I continue to make legal and financial decisions for myself?
Yes. The Agent named in a Power of Attorney is your representative. So long as you have the legal capacity to make decisions you can direct your Agent to do only those things that you want done.
Is it possible for an Agent to steal my money and property?
A Power of Attorney can be abused, and dishonest Agents have used Powers of Attorney to transfer the Principal's assets to themselves and others. That is why it is so important to appoint an Agent who is completely trustworthy, and to require the Agent to provide complete and periodic accountings to you or to a third party.
Who monitors the actions of my Agent?
There is no official or government monitoring of Agents acting pursuant to Power of Attorney. That is the responsibility of the Principal. It is therefore important to insist that your Agent keep accurate records of all transactions completed for you, and to provide you with periodic accountings. You might also direct your Agent to give an accounting to a third party in the event you are unable to review the accounting yourself.
Should a Principal, member of the Principal's family or a friend have grounds to believe that an Agent is misusing a Power of Attorney, the suspected abuse should be reported to the police or other law enforcement authority to protect the Principal from the loss of his or her property. Consider asking a solicitor for help and advice.
What are an Agent's obligations to a Principal?
The Agent is obligated to act in the best interests of the Principal, and to avoid any self-dealing. Self-dealing is acting to further the selfish interests of the Agent, rather than the best interest of the Principal.
An Agent appointed in a Power of Attorney is a fiduciary, with strict standards of honesty, loyalty and candour to the Principal. An Agent must safeguard the Principal's property, and keep it separate from the Agent's personal property. Money should be kept in a separate bank account for the benefit of the Principal. Agents must also keep accurate financial records of their activities, and provide complete and periodic accountings for all money and property coming into their possession.
How many copies of a Power of Attorney should I sign?
You are required to sign (execute) only one copy, although it is not unusual for a Principal to sign several original copies. Banks and financial institutions, for example, generally require an original or a certified copy before allowing an Agent to transact business on the Principal's behalf.
Do I need to have my signature witnessed on a Power of Attorney?
Your signature on the Power of Attorney must be witnessed by a Notary Public.