What Is a Power of Attorney?

What Is a Power of Attorney?

A power of attorney is simply a document giving another person (the agent) the legal authority to represent you and act on your behalf. This is necessary when a third person is asked to rely on that authority. In financial matters, this third party could be a bank, utility company, securities and investment broker, insurance company, mortgage lender, a company that provides materials or services to a business you own, or, numerous other individuals, business entities or government agencies with whom you conduct personal or professional business. In the case of health care matters, this third party could be various types of health care providers, such as doctors, hospitals, physical therapists, dentists and home health agencies.

Of course, a power of attorney is not necessary every time someone does something for you. For example, if you ask a friend to get a gallon of milk for you from the supermarket, your friend can do it without a power of attorney. He or she will be paying for it at the time of purchase, and the grocer has no concern about your arrangement.

It is an entirely different matter, however, if you ask your friend to go to your bank and borrow $5,000 in your name. The bank will want to be sure that you are legally obligated to repay the loan, and it will not just take your friend's word for it. The bank will want to protect itself so it will require some kind of proof that you have authorized your friend to obligate you to repay the money. A power of attorney could provide the bank with the assurance it needs.

  • Introduction to Power of Attorney
    A power of attorney is a document that lets you name someone to make decisions on your behalf. This appointment can take effect immediately if you become unable to make those decisions on your own. For example, if you become mentally incapacitated, or leave the country for a period of time, you...
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  • Definition of a Power of Attorney
    A power of attorney is a document you can use to appoint someone to make decisions on your behalf. The person you designate is called an "attorney-in-fact." The appointment can be effective immediately or can become effective only if you are unable to make decisions on...
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  • Durable Power of Attorney Permissions
    You can give your attorney-in-fact as many or as few powers as you want. A power of attorney can authorize your agent to do any or all of the following on your behalf:
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  • Legal Requirements for a Power of Attorney
    There are two essential elements of a valid power of attorney:
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  • Married Couples and Power of Attorney
    You should not assume your spouse will have total control of your finances if you become incapacitated. Although your spouse has some rights over property you own together, like joint bank accounts, he or she is restricted from doing certain things with that property. For example, generally both...
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  • Putting a Power of Attorney into Effect
    A durable power of attorney can be drafted so it becomes effective as soon as you sign it. Alternately, you can specify that it will not become effective unless a doctor certifies that you have become incapacitated. This is called a "springing" power of attorney. It...
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