What is the Power of Attorney?
This is a legal document where the maker of the document, the Principal, designates another individual, called the Agent, to act on his or her behalf and perform certain legal acts when the Principal cannot do so. The type of authority given to your Agent depends on the specific language of the Power of Attorney.
What are some of the uses of the Power of Attorney?
The Power of Attorney can be used to give another the right to buy and sell property, to sign a contract, or handle financial and legal decisions. A Power of Attorney can be “Limited” to a certain specific act, such as allowing someone to sign closing documents on a home you are selling out of state. Or a Power of Attorney can be more general and typically gives the Agent very broad powers to perform legal acts on behalf of the Principal.
A Durable Power of Attorney remains effective even if a person becomes incapacitated. However, the Durable Power of Attorney must contain special wording that provides the power survives the incapacity of the Principal.
Must a person be competent to sign a Power of Attorney?
Yes, the Principal must understand what he or she is signing at the time the document is signed. The Principal must understand the effect of a Power of Attorney and the role of the Agent. Clients are counseled to choose someone who is trustworthy and reliable. Certain financial institutions and not-for-profit organizations may also serve.
Don’t wait until it’s too late for you or your loved ones to obtain a Power of Attorney. If it’s too late, and the person is not competent to understand and execute a Power of Attorney, then the only alternative might be a Guardianship proceeding – which can be complex and very costly.