A Power of Attorney is a legal document that authorises a designated person, termed an attorney to act or make decisions on behalf of the principal if he/she is permanently or temporarily incapacitated. The donor or principal is the individual who gives away the authority, whereas the attorney or holder is the person who receives it.
In simple terms, a Power of Attorney (POA) allows the holder to take decisions on the principal’s behalf in specific circumstances of illness, and insufficient mental or physical capacity. Also, if you are travelling internationally and are unable to sign any documents, the person you have as your designated attorney will execute these decisions on your behalf.
While planning your estate, you should consider signing a power of attorney; so that in the event of an unexpected occurrence, the attorney has the right and legal authority to make decisions on your behalf regarding your assets, properties, and riches.
Types of Power of Attorney
- General Power of Attorney – When the principal gives the power to the attorney to act lawfully concerning his/her property, bank transactions, tax payments etc. One must never forget that the General Power of Attorney does not give power to the holder to do some specific work. You either give a General Power of Attorney for all your holdings like a bank account, tax matters, etc., or you provide it for any category like only for tax matters, health matters etc.
- Specific Power of Attorney – When the principal gives the attorney authority to do a specific duty, this is known as Specific Power of Attorney. Never forget that the SPA, or Specific Power of Attorney, will be terminated once the work gets completed.
- Durable Power of Attorney – If the principal is unable to make decisions and becomes incapacitated, then according to Durable Power of Attorney, the holder will have all legal authority to make decisions on the principal’s behalf. Remember that the Durable Power of Attorney expires when the principal passes away.
- Medical Power of Attorney – As the name implies, a Medical Power of Attorney gives the agent authority to make medical decisions on the principal’s behalf.
Making a power of attorney is not difficult today. You can make your power of attorney if you are legally allowed to get into a contract. Numerous websites enable you to create a POA online for a nominal fee. You simply need to fill out a few required fields, make a payment online, and print the document; that is all you need to do.
Important Clauses of Power of Attorney
When drafting a Power of Attorney, it is critical to include an obligatory clause specific to the type of Power of Attorney created. Some of the must-have clauses of a Power of Attorney are:
- The name, age, gender, address, and occupation of the principal
- The attorney, to whom the power has been given
- The reason for giving the power to the attorney; the reason should be legally justifiable.
- The date and place of making the attorney deed and the date it comes into force.
- The date of termination of the attorney if it is time-bound. If the POA is not limited, mention whether the POA is durable or not.
- In the case of a general power of attorney, all the acts and areas of granting power must be stated clearly.
- If the power is a specific power of attorney, then the special acts or tasks that need to get completed should be mentioned clearly.
A power of attorney is a powerful estate planning instrument that allows you to be ready for any future unexpected situations. Life is unpredictable, and if you find yourself on the wrong side of an awful incident, it will be impossible for your loved ones to have access to your holdings without a POA. Hence, preparing a Power of Attorney is a wise method to begin your estate planning.