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The function of a power of attorney is to allow another individual to make legal decisions for the person that grants the power of attorney to the third party. The person creating or granting a power of attorney is called the principal while the person acting on the principal’s behalf using the Power of Attorney is called an Agent or Attorney in Fact.
A few of the most common situations when a power of attorney is used is (1) when an individual enlists in the military service and needs some one to attend to his or her affairs while the service member is over seas, (2) when someone cannot attend a real estate closing transaction to sign the documents his or herself, or (3) when a family member needs to help another family member with his or her financial affairs but is not listed as an account owner. The list of uses for a power of attorney is very large and covers many situations not described here.
The principal must be in good mental health when making a power of attorney. The principal must make the decision about whether a power of attorney will be valid if the principal should ever become incapacitated and what specific acts that the Agent or Attorney in Fact can make in the principal’s name. A power of attorney always expires at the death of the principal, and can terminate sooner at the election of the principal.
One of the biggest benefits to a power of attorney is that it helps a principal to avoid guardianship and conservator ship proceedings because the principal has already selected a trusted confidant person to manage his or her affairs in the event of incapacity. Guardianship and conservator ships can become extremely expensive and quickly diminish the principals assets.
There are many different forms of a power of attorney available to principals. It is essential to consult with an attorney about what type of a power of attorney is the best solution for the needs of a principal. A one size fits all power of attorney is rarely an ideal solution and can be subject to abuse by the attorney in fact. It is important that both the principal and Agent or Attorney in Fact understand how a Power of Attorney is properly used and the legal standards for using it. Contact our office today to learn how a Power of Attorney can better serve your legal goals and needs.