A power of attorney is a legally binding contract that allows one person to act on behalf of another. A power of attorney is usually used when one has issues dealing with finances, business dealings, estate planning, etc. It does not grant the agent any right or privilege to deal with the affairs of another. In other words, it simply allows another person to make confident decisions on your behalf and handle those affairs should you become unable to do this.
An attorney does not itself represent the principal; and instead, he represents the principal only. In legal terms, a principal “assigns” (or authorizes) his powers to an “agent” or “principal” who in turn grants these powers. These agents can be anyone- a spouse, adult child, relative, or anyone who has the legal authority to act on the principal’s behalf.
There are several benefits of having an enduring power of attorney. First, they provide a convenient way for individuals to handle their affairs when they become mentally incapacitated. Second, a power of attorney acts just as a will would; it states what you want to be done and who you would like it to be done. The person with a power of attorney then has the power to choose a person (some states allow a single individual to act on the principal’s behalf) and establish that person as a legal representative. Once this is done, the agent has the power to manage the agent’s duties, including paying expenses and travelling, among others. Finally, the powers of attorney are nondurable in this regard.
Another benefit of these powers of attorney is that they are generally easy to establish. They are not, as some assume, “dummy” powers of attorneys, which essentially allow individuals to establish a power of attorney without actually doing so. Instead, a power of attorney is established with the help of a written contract between the principal and the agent. While the principal can choose to have the agent serve only in an advisory capacity, the agents themselves may undertake the duties and fulfil the financial and other responsibilities with a power of attorney. Moreover, if the principal chooses to establish such a relationship, the agent must not disclose any information regarding the principal’s decision.
It is best to become acquainted with all of the requirements for establishing this relationship before beginning the process. The most common requirement is that the principal and the agent both fully disclose their roles and duties to each other. They must also decide how and why they wish to establish a power of attorney and enter into a legally binding contract. The contract, referred to as a power of attorney statement, should include the principal’s full name, address, date of birth, social security number, and date of signing. In some jurisdictions, the document also may include the name and address of the parent or guardian if different than the one listed here.
Generally speaking, agents are allowed to manage and make decisions on behalf of the principal. It includes legal and medical decisions. The principal may appoint agents, or an individual or a business may hire them. Even though the attorney has the authority to manage his affairs on his behalf, he does not have the right to take financial and medical decisions without consulting with the principal’s best interests in mind.