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What is a Power of Attorney?

Powers of attorney are governed by the law of "agency", a branch of common law concerned with the delegation of power from one person, generally called the "principal", to another, called an "agent" (View or download the enclosed booklet entitled "Agency and Fiduciary Responsibility in the use of Trusts, Wills and Partnerships.").

When a person becomes incapacitated, the government, or probate court, often steps in and appoints someone to represent and take any legal decisions that the person would have to take. One of the methods to avoid government or court intervention, and the appointment of a stranger or a bureaucrat, is the use of a power of attorney. A power of attorney is a written document stating that one person gives to another the full power and authority to represent him or her. It must be signed by both the attorney and the principal and, preferably, notarized.

Beware of domicile State differences!

The rules regulating powers of attorneys tend to vary significantly from state to state. For example, it is customary in some states to refer to the person giving the power of attorney as the "principal"; whereas other states refer to the "donor". The person receiving and potentially exercising the power of attorney may be called the "attorney", "attorney in fact", "agent" or "donee." Some states require two witnesses before a power of attorney can be valid; other states require that the power of attorney be recorded in the courthouse or county recorders office. Some states exclude certain persons from acting as attorney to a power of attorney while others require special government forms to be used. Also, some states don't even recognize the "springing power of attorney" For these reasons, it is not possible to give any specific outline of powers of attorney in the United States in this web document. Consequently, the following should be considered as general legal information which must be supplemented by reference to power of attorney legislation in each state or to a legal professional, before signing it.

General principles

A general power of attorney gives the attorney all powers to act on your behalf. A special power of attorney gives the attorney only limited authority, restricted to certain duties such as to "sign, on my behalf, any offers to purchase my property at 56 Robert Street, during that period of time when I am on overseas travel" or "to exercise my right to vote at the 1997 annual meeting of XYZ Corporation."

Because powers of attorney are closely related to the capacity of the principal, they are automatically revoked if the principal were to become incapacitated (for example, by death, mental incapacity or bankruptcy of the principal). However, some powers of attorney are designed precisely to survive the incapacity of the principal and are called "durable power of attorney". A variation of a durable power of attorney is the "springing power of attorney" which "springs" to life when a certain event, specified in the power of attorney, has taken place. An example of these are medical situations where a spouse is given the power of attorney to make decisions regarding the principal's life support in a situation where the principal cannot express themselves.

Generally, powers of attorneys can be revoked by destroying the original, although it would be wise to advise the attorney that the power has been destroyed. If a power is given for consideration, it cannot be revoked unilaterally.

Agents or attorneys do not have to accept the power. By accepting a power of attorney, a attorney agrees to carefully make decisions on behalf of the principal. They can be sued for mistakes they make. If a attorney exceeds the power given, the principal cannot be held responsible for those acts. If you are dealing with any person on the basis of a power of attorney, insist on reading the power of attorney and noting any limitations which might be contained in it.

Drafting tips

Although there is no legal requirement for a power of attorney to be type-written, this is advisable. Powers of attorney are very powerful documents so legibility should not cloud their intent.

Use clear language. Powers of attorney are interpreted strictly by the courts so if the language so if there is any doubt, a power of attorney may be interpreted by a court to include lesser powers than originally intended by the principal.

Make sure to clearly specify in the power of attorney the limitation, if any, that you wish to impose or clearly set out at what date, or upon the occurrence of what event, the power of attorney kicks in or expires.

Identify the principal and attorney clearly including their home address to ensure proper identification or any relationship with you (eg. "spouse").

State how the power of attorney is to end and that it can be revoked.

Both the principal and the attorney should sign the power of attorney. Give the attorney a copy or make sure the attorney knows where to find the power of attorney amongst your possessions should it be required.

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