Builders and Contractors Exchange
Weekly Bulletin: 16 nov 2007
Power Of Attorney: 101 – The Basics
What is a Durable Power of Attorney?
A “Power of Attorney” is a legal document that is used by one person to delegate legal authority to another person. The person who signs the document is called the “Principal.” The person to whom the authority is given is called the “Agent” or “Attorney-in-Fact.” Once the Power of Attorney document is signed, the Attorney-in-Fact can sign contracts, write checks and generally act on behalf of the Principal. Actions of the Agent taken in accord with the Power of Attorney will be legally binding.
The Principal can give the Agent broad legal authority to perform a wide variety of actions (a “General Power of Attorney”), or can limit the authority to a specific action or acts (a “Special Power of Attorney”). For instance, if a person will be traveling overseas, but is buying a house, they can sign a Special Power of Attorney” form granting an Agent authority to sign all of the necessary closing documents.
What Makes the Power of Attorney “Durable”?
The “Durable” General Power of Attorney is often used in estate planning to give the Agent authority when the Principal becomes legally incapacitated. For example, if a Principal becomes injured or ill and is hospitalized and incapable of making decisions for himself, the Durable General Power of Attorney will allow the Agent to make decisions on his behalf.
A Power of Attorney, whether durable or not, is effective upon the signing of the instrument unless language is added to make it a “Springing” Power of Attorney. A power of attorney is “Springing” if it does not take effect until a specific event (i.e. date of closing on a transaction, or when the Principal is determined be incapacitated.)
A Durable Power of Attorney can be a very helpful document and an important part of your overall estate plan. It can also create huge problems if given to the wrong person. Consult an attorney to learn more about these versatile documents and decide whether you and your family would benefit from having a Durable Power of Attorney.
Questions?
If you have any questions about this article or any other related matters, please contact:
This article is meant to bring awareness to this topic and is not intended to be used as legal advice.