A power of attorney (POA) is a legal document that authorizes one person (called the agent, attorney-in-fact, or attorney) to act on behalf of another person (called the principal, grantor, or donor) in private, financial, business, or legal matters
. This authorization can cover a broad range of decisions or be limited to specific tasks, depending on the type of POA granted. There are several types of power of attorney:
- General power of attorney : Grants broad authority to the agent to handle all personal and business decisions for the principal
- Special or limited power of attorney : Restricts the agent’s authority to specific acts or situations
- Durable power of attorney : Remains effective even if the principal becomes mentally incapacitated, allowing the agent to continue making decisions on their behalf until the principal’s death
- Temporary power of attorney : Valid for a limited time period
A POA is often used for advance planning, such as when a person anticipates being unable to manage their affairs due to illness, mental incapacity, or absence (e.g., military deployment)
. Without a POA, if someone becomes incapacitated, a court may need to appoint a guardian, which can be costly and time-consuming
. The agent has a fiduciary duty to act honestly and loyally for the principal’s benefit
. The document must be signed by the principal and often requires witnessing or notarization depending on jurisdiction
. In summary, a power of attorney is a legal tool that enables a trusted person to make decisions and act on behalf of another, particularly in financial, legal, or health-related matters, especially when the principal is unable to do so themselves
