Introduction:
POA, this term refers to a legal authorization which is known as “Power of Attorney”. It is a legal document that gives power to a person to manage the expenditures, finance, and assets of that person. In simple words, by this document anyone can appoint another person which does act for that person who appoints him.
Appointed agents are free to act and make decisions in the absence of the individual who created the POA. Agent has the legal right to act on behalf of the principal. It will be deemed as that made by the principle itself.
The power of attorney is regulated according to the POA. Principle can give broad or limited authority while making the POA. For example, make decisions only about the principal's investments and medical care.
Easy to Understand:-
- A legal document which transfers the power to act for another person.
- The person who transfers the authorization to act will be - principal, grantor, and donor.
- Person who receives the authority becomes the agent also known as attorney-in-fact.
- The power of attorney regulated by the POA legal document.
- Agents can have wide legal scope or limited authority to make decisions.
- In the absence of principle, agents will take the decision such as the principal's property, finances and medical care.
- Agent can only have power of attorney when the principal cannot act personally.
Attorney-in-fact
Usually, Instead of an agent this term attorney-in-fact is used in many jurisdictions. However, this term is totally different from “attorney at law” which is used in the USA.
Basically, In the United States, an attorney-at-law is a solicitor (who has an advocate in a specific jurisdiction). An attorney-in-fact is a person who is authorized to act by using power granted by an attorney but it can not engage in those acts which is unauthorized practice of law.
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The Uniform Power of Attorney Act coined the term agent. As an agent or attorney-in-fact is a fiduciary for the principal. So he should be honest and loyal to the principal in their dealings with each other.
An attorney has power to act on behalf of another person whoever granted the power. If he does the acts which are unauthorized to do then it will be considered as misuse of power.
Types of Powers of Attorney
There are mainly two kinds of POAs, financial and health care. Below we discussed these two attorneys, so read the complete article.
1. Health Care (Power of Attorney)
This is also known as HCPOA. In this document principals grant a durable power of attorney to agents for health care. In Simple, It is a power to make health-related decisions.
This legal document is also known as a healthcare proxy which lays out the principal’s consent to the agent. The health care POA is legally bound to look after medical care decisions on behalf of the principal. As such, when the principal is unable to make health-related decisions on their own.
2. Financial (Power of Attorney)
This is a document which allows agents to manage the finance and business of the principal. In this POA agent takes care of the financial affairs - such as signing checks, filing tax returns, mailing, social security checks etc.
Whenever a grantor becomes unable to make decisions, the agent will use the power of attorney. It is crucial for agents to carry out the principal’s wishes to the best of their ability. At least agents should follow the extent of what the agreement has written.
Grantor gives the wide range of power over their financial account, which also includes the ability to make deposits and withdrawals, sign checks, and make or change beneficiary designations.
Financial power-of-attorney is divided into three different categories. These three types are:
- General POA
- Limited POA
- Durable POA
2.1. General Power POA
In this POA agent can make the decision in any law on the behalf of the principal. But the law should not be forbidden by law. Under such an agreement agents can also be authorized to manage bank accounts, sign checks, sell property, manage assets, and file taxes for the principal.
2.2. Limited POA
As the name implies in this POA the grant of the agent’s is limited. Power of attorney gives the power to the agent to act on behalf of the principal only in specific matters or situations. It can be that the agent is only allowed to manage the principal's retirement accounts. This POA also works for a specific time period.
2.3. Durable Power of Attorney (DPOA)
In durable POA (DPOA) agents are allowed to take control of property, financial matters and certain legal decisions which is specifically spelled out in the agreement. Even after the grantor becomes mentally unsound..
However DPOA can pay medical bills of the principal whereas it cannot make health related decisions.
Protect Against POA Abuse
Power of attorney abuse can have many forms some of are given below:
- Wrong POA document, itself considered as a forgery.
- Agent spends your money on himself instead for your benefit.
- Threat from the agent side to give more authority that you don’t want to grant.
- Do those acts which are not authorized to do for example, change beneficiaries on insurance policies and make gifts.
Protect against POA abuse by:
- Appoint your agent carefully, who are really truthful and honest. Ensure they have knowledge about your interests and preferences.
- Your family members, friends and financial advisers should know about your POA so they can interfere whenever it is needed.
- If your POA is not working according to you then change them. Whenever you feel this is not the best person to handle your finances, you can cancel your POA.
- Many countries and states have their own rules and regulations to prevent POA abuse. So you have to know about these laws, it will help you to feel safe. I hope this article provides you with all the information which you want!
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Reference: https://en.wikipedia.org/wiki/Power_of_attorney
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