A power of attorney is a legal document that gives someone the authority to sign documents and conduct transactions on another person’s behalf. A person who holds a power of attorney is sometimes called an attorney-in-fact.
Many people sign a financial power of attorney, known as a durable power of attorney, to give a friend or family member the power to conduct financial transactions for them if they become incapacitated. People also commonly sign health care powers of attorney to give someone else the authority to make medical decisions if they are unable to do so.
Powers of attorney have other uses as well. You might give someone power of attorney to act in a particular transaction if you cannot do it yourself, such as signing documents at a real estate closing when you are out of town.
How to Sign as Power of Attorney
When you sign a document as someone’s attorney-in-fact, your signature needs to make it clear that you—not they—are signing the document and that you are acting under the authority of a power of attorney.
To understand how this works, let’s suppose your name is Jill Jones and you have power of attorney to act for your friend, Sam Smith. You could sign a document in either of the following ways:
- “Sam Smith, by Jill Jones under POA”
- "Jill Jones, attorney-in-fact for Sam Smith”
Before signing, it’s a good idea to ask if there’s a preferred format for your signature. Sometimes banks or other institutions will only accept a power of attorney signature if it’s written in a certain way. You should never sign your name or the other person’s name without indicating that you are signing under a power of attorney.
Always bring your power of attorney document with you when you transact business on someone else’s behalf and make sure the people you do business with know that you are acting under a power of attorney.
Duties of an Attorney-in-Fact
A person who acts under a power of attorney is a fiduciary. A fiduciary is someone who is responsible for managing some or all of another person’s affairs. The fiduciary has a duty to act prudently and in a way that is fair to the person whose affairs he or she is managing. An attorney-in-fact who violates those duties can face criminal charges or can be held liable in a civil lawsuit.
Because of this fiduciary relationship, any transaction where you will personally benefit can raise questions about whether you are acting in the best interest of the person who gave you the power of attorney. It’s a good idea to consult a lawyer before signing as power of attorney in a transaction where you will reap substantial benefits.
Things to Watch out For
Don't exceed your authority. A power of attorney document may give you broad power to transact business, or your powers may be more limited. Make sure you understand what you are and aren’t allowed to do as attorney-in-fact, and consult a lawyer if you need clarification. You could face civil or criminal penalties for unauthorized transactions.
Failing to add the power of attorney language to your signature. If you sign a document in your own name without indicating that you are acting under a power of attorney, you could be held personally responsible for the transaction. If you sign only the principal’s name, you could face criminal or civil penalties for fraud or forgery.
A power of attorney can be invaluable if you need to manage the affairs of an ailing relative or sign documents on behalf of someone who is unavailable. If you act as attorney-in-fact for someone, make sure you understand your authority and responsibility, and always sign in a way that indicates that you’re acting under a power of attorney.