What is Power of Attorney?

A power of attorney (POA) is a legal document that authorizes someone to act on behalf of someone else. The person granting it is known as the principal, granter, or donor, while the person authorized to act is called an agent, attorney-in-fact, or attorney, in some regions of the world. There are many different types of power of attorney, and these documents can be immensely useful and flexible. However, they can also be dangerous, especially for people who do not realize that they are agreeing to when they sign one.

The term “attorney” may be a bit confusing for people who live in nations where lawyers are referred to as attorneys. Attorneys-at-law, as they are more properly known, are legal professionals who have attended legal training and passed an examination to qualify to practice law. The attorney in this legal document is an agent empowered to act on behalf of someone else, but he or she cannot practice law.

In the case of a full or general power of attorney, the agent is allowed to make any decisions he or she sees fit on behalf of the principal. This power could potentially be abused, as in the instance of an agent who transfers funds out of bank accounts owned by the principal and into his or her own. This action is entirely legal, however, which means that the principal has no legal recourse for recovering those funds.

Limited or special powers of attorney are documents that authorize an agent, but set certain limitations on the agent. These documents are used to ensure that the agent cannot abuse his or her status. For instance, one of the limits might be a restriction on funds transfers to prevent the very scenario discussed above.

Unless specified otherwise, a power of attorney takes effect as soon as it is signed and witnessed, and it is nullified only by the death of the principal, a mutual termination of the agreement, or the satisfaction of a clause in the document, such as the principal's 18th birthday. Some people set up ones that are inactive until they are required, as for instance in the durable power of attorney, a document which gives someone control in the event that the principal is incapacitated.

Powers of attorney may be granted orally or in writing, as long as witnesses are present. People should think carefully before asking a lawyer to draw one up, because once authorized, the document is difficult to reverse. It is a good idea to discuss the document with the potential agent, so that she or she understands what is expected. It is also critical to choose an agent who is highly trusted, and who would act as the principal would in any situations over which he or she might have jurisdiction.