I have heard many people use the term power of attorney commonly in normal speech. However, I often wonder if they actually know what it is they are talking about. The term power of attorney can accurately be described as that legal way by which you can have someone act for or as you in a particular dealing. This is common in the business world where for a particular reason you might not be able to go ahead with a specific task and will therefore request that someone stand for or as you to see the dealing to completion. The power of attorney is legally recognized as the process by which this is done. If you are the one giving another the right to stand for you, you are legally called the ‘principal’ and the person you authorize to stand on your behalf is the ‘agent’. The agent reserves the right to act for you, even as far as signing crucial documents in your name.
An agent is required by the law to be a fiduciary to the principal. It is also required that there be a written agreement between the agent and the principal which will then vest the power of attorney on the agent. In some cases – in most cases in fact – the plans as to how the agent is remunerated are also specified in the written contract. In some cases, however, the contract may simply be verbal. However most times this might not be honored in top institutions like banks, hospitals and the IRS which explicitly require that the power of attorney be strongly backed by written documentation.
There is a law that binds the agent to the responsibilities of the principal. It is called the Equal Dignity rule. This law makes it mandatory for the agent to do certain things that the principal would have been required to do under normal circumstances. For instance if the agent has the power of attorney to represent the principal in the sales deed of the principal’s house, the signature will have to be notarized by the law. Therefore, the agent’s signature to the sales deed will have to be notarized.
Under the law, there are two types of powers of attorney. The first is the special power of attorney, and the other is the limited power of attorney. The power of attorney may be used in specific or special circumstances or it may be just for general circumstances. This would however depend on what was approved in the court. It is a provision in the court that the power of attorney be revoked when the grantor – that is, the principal – meets his demise. Also, the power of attorney is revoked when the principal is incapacitated by illness for instance. But if the principal make provision for this and adds a clause that allows the agent continues in the event that the principal is incapacitated.
In the US there is also a springing power of attorney; it only comes into effect when the principal is incapacitated.