Power of Attorney is a legal document that allows a person to give permission to another person or entity to act on their behalf in matters related to finance, business, and medical decisions. The person who creates the power of attorney is known as the principal. Without a power of attorney, it may be necessary for a court to appoint someone to act on your behalf. This person is known as a guardian, curator, or committee, depending on local state law.
Creating a power of attorney document is important to avoid the need for court intervention. This document allows you to choose who will act on your behalf and defines your authority and limits, if any. In some cases, greater security against the imposition of a guardianship can be achieved if a revocable living trust is also created. The person named in a power of attorney to act on your behalf is commonly referred to as your de facto agent or agent.
Their power of attorney comes into effect at different times depending on the POA you choose. Broad language that gives an agent all the powers to manage their financial affairs or make health care decisions may be sufficient for many purposes. Anyone planning an unexpected disability or long-term care should consider creating a power of attorney document in case of need. The person to whom the power of attorney is granted has a legal fiduciary duty to make decisions that are in the best interest of the person they represent.
You can use limited POAs to give different people definite and limited powers over different aspects of their finances. For example, if another person acts on your behalf to sell a car, the Department of Motor Vehicles will generally require that the power of attorney be filed before the authority of your agent to sign the title is fulfilled. If no land is to be treated, it is not legally necessary to sign a power of attorney in front of a notary or have it registered, but notarization may be prudent. A medical POA, or permanent power of attorney for health care decisions, or health care power of attorney, is both a durable and an emerging POA. For example, the POA could simply empower someone to represent you at a real estate closure in another city.
Others, however, in order to empower their agent to minimize state wealth tax, could continue or add such power.
