Learn how to understand and properly use a durable power of attorney by reading through this brief yet informative guide.
A power of attorney is very useful during times when you aren’t available to make certain decisions regarding personal or business affairs. This isn’t a permanent contract, however; if you want such an agreement to last even when you aren’t able to foresee those acts yourself, then what you need is a durable power of attorney. But what are these terms exactly? How do they differ from one another and how do you use them? Before sitting down with your lawyer, you might want to do some research on your own to be more informed of the law so that you don’t end up completely clueless or in any loopholes. Here are some of the facts you should get acquainted with before moving on to the legal formalities.
What Is a Power of Attorney?
First, let’s look at two words that will be used frequently from here on: “principal” and “attorney-in-fact” (AIF).
The principal is used to refer to the original creator of the power of attorney and the person awarded with the power of attorney is referred to as the attorney-in-fact or AIF for short.
A power of attorney is a legal document that gives the attorney-in-fact the authority to do particular things on behalf of the principal. Upon receiving a power of attorney, an AIF will be able to do a number of things; they can make bank transactions, sell houses, cars, a piece of land, or anything of that sort. The AIF can even sign contracts in the place of the principal. To summarize, when you give someone a power of attorney or receive it, you will be able to do things that the principal would normally be able to do but cannot do due to unavoidable circumstances. Anyone over the age of 18 or certain organizations can hold the power of attorney. There are no special certifications needed to achieve this power.
When does one consider granting the legal rights to make important decisions in their stead? It could be that they are simply preoccupied with other more crucial matters, or that they are physically (due to health reasons) unable to act on their own.
What happens when someone needs a power of attorney to sustain beyond normal limits? Let’s find out.
Power of Attorney vs Durable Power of Attorney
The standard power of attorney lasts as long as the principal themselves; in the event that the principal is unable to act due to disability or disease, the power of attorney is terminated. This makes things quite troublesome, as it stops the designated attorney-in-fact from doing important tasks for the principal.
Normally, when someone is empowered as an AIF, they are able to carry out very important legal work. It is an enormous and important responsibility, and if by any chance the contract abruptly ends due to unfortunate situations, the power of attorney would become useless and therefore the AIF(s) will not be able to handle a principal’s issues even if it is required.
To bypass this inconvenience, the durable power of attorney was devised. The key difference between a regular power of attorney and the latter is that this contract stands even when the principal is incapable of acting. Today, durable powers are more preferred over regular ones.
How to Use a Durable Power of Attorney
For the sake of simplicity, further mentions of power of attorney will refer to the durable power of attorney.
A power of attorney is effective only after the principal has signed it or after a certain time. This may be after the principal becomes incompetent for reasons such as disease or death. Once an attorney-in-fact receives the power, they must make a copy of all the legal documents. When interacting with a third party on behalf of the principal, the AIF should provide these documents to them in order to proceed any further.
Sometimes, third parties can reject your power of attorney. This usually happens when they suspect a forgery. They may consult their legal department to confirm the authenticity of the documents. Most of the time the third party does not want to burden themselves with legal trouble if something goes wrong. With that being said, third parties must accept the power of attorney in any circumstance (given your documents are authentic) but if they refuse to cooperate, you as the AIF can get in contact with a lawyer.
Signing an Affidavit
The third-party sometimes might require you to sign an affidavit. This is usually a written statement that ensures the third party that you are performing your duties as an attorney-in-fact. This gives the third party a way of fixing any problems in the event they accept a fake power of attorney.
Responsibilities of an Attorney-in-Fact
As an attorney-in-fact, it’s your responsibility to make it clear to any of the third parties involved that you are acting at the behest of your principal. You are required to sign these contracts for the principal, not for yourself. If you sign papers in your name, you will be held accountable for any potential damages.
One of the most stressful tasks for an average individual is to manage their finances. When you are given the power of attorney, you can, under the stated conditions within the contract, handle the principal’s finances. It’s very easy to make hefty and wrong investments here and there, but as long as you can prove that you are spending cautiously and responsibly, you most likely won’t be held accountable for any bad investments.
There is certainly more to a power of attorney than what is mentioned here, and if you want to use your power correctly or give this power to someone, consider contacting an expert who can explain everything from top to bottom.
A professional writer with over a decade of incessant writing skills. Her topics of interest and expertise range from health, nutrition and psychology.