A "power of attorney" is a legal instrument which grants another person the authority to act as your legal representative, and to make legal and financial decisions on your behalf. The person who is issuing the power of attorney is known as principal, while the person who acts on behalf of the principal is known as attorney-in-fact.
Since the power of attorney grants the power to a third party to sign your name to legal contracts, you should be careful in choosing the right person for this job. There are two types of powers of attorney:
- General: it is unlimited in scope and duration.
- Specific: limited to a specific type of act.
The power of attorney becomes invalid upon the death of the principal. It also becomes invalid if the principal becomes incapacitated due to mental illness or physical injury. However, if the principal makes a provision that the power of attorney will continue in case of his or her incapacitation, it is known as a “durable” power of attorney. This type of power of attorney serves as a living will.
In some jurisdictions, it is possible to invoke a springing power of attorney. In this type, the power of attorney only becomes effective when specific acts take place in the future. (For example, the principal becomes incapacitated). This can be used to allow a family member to manage the principal’s affairs in the event of illness or injury.
The principal of a power of attorney can revoke the powers granted to the attorney-in-fact by informing the latter that it is revoked. |
