What is Power of Attorney and When and How Would You Use It?
There are times in life when someone may be asked to fill out a power of attorney form. At another time, someone may decide that they need a formal means of allowing someone to act on their behalf. Some people may have heard of a power of attorney, and some may simply be aware of the existence of such a creature but only have a hazy idea of what it does. So, let’s define it, see when it could be used, see what types there are, and what the disadvantages and advantages are.
In its simplest form, a Power of Attorney is a formal, legal means of handing over your authority to make certain decisions, and act on your behalf – in your name, to someone else. The types of actions allowable are generally defined to some extent, and allow the holder of the document to make daily decisions in your name, represent you in specific legal situations, or handle business, legal, or financial situations in your name. A completed power of attorney form may set out very specific situations when it may be used, or it may be quite broad in scope, depending on your wishes.
Use of power of attorney generally takes the form of a preemptive strike of sorts. You know that you will not be able to attend to certain matters, for example, so you assign the task of acting in your behalf to someone else. People in the military, for example, are often away from home when important events which take place, so they may run to the Judge Advocate General’s (JAG) office and fill out a power of attorney form to enable their spouse to take care of certain events in their name. An executive or business owner may be unable to be physically present at an important business event and can empower another to act on his or her behalf. Others may simply be planning ahead to a time when they might not be able to make certain decisions for themselves. Having completed what is generally a relatively simple form assures them that someone they trust will have the reins and be legally able to act on their behalf.
There are essentially two types of power of attorney – durable and limited.
The durable power of attorney permits another party to act in your name and behalf in almost any form or type of business or transaction. Someone who wants to separate themselves at least semi-permanently from certain activities, such as buying and selling stocks or managing property might choose this option. People who are disabled and cannot travel about conducting their own affairs may designate a trusted individual to have the authority to act in their name. Someone preparing for a day when they may no longer be able to accurately assess and act on matters requiring their thought, decision, and action may prepare one in advance of that time.
The limited power of attorney is a simpler affair. It is used to allow your representative to act on your behalf, but with certain limitations. There are essentially two possible limitations:
* By Task: In this form, the authority granted is specifically stated to be for a certain purpose…to buy a car, or sell a certain piece of property, for example.
* By Time: In this instance, there are specific date limits set. This could be used if you were going to be out of the country for a week or two but wanted to make sure that certain things got taken care of while you were away.
As you can see, having someone available to act on your behalf in times when you may not be available or are incapacitated can be handy indeed. This “attorney-in-fact” can help you keep your affairs managed while you are occupied with other situations or events. All they have to do is produce the power of attorney form you prepared and sign or act as if you were there yourself. The scope of the authority, either by task, time, or both is easily written into the document. In the limited form, the authority granted will automatically expire at a certain time or upon the completion of the task, but, as the person who made it in the first place, you may revoke it at any time.
It is a simple task to complete but legal counsel may be advised in some instances, It is also a common task, and you will be able to find well designed power of attorney forms in office supply stores and online.