The power of attorney

A Power of Attorney is a legal document. When you give someone power of attorney you give him or her legal power to take care of financial and legal matters for you. This might include paying bills, depositing or withdrawing money from your bank account, investing your money or selling your house.

The person who signs (executes)a Power of Attorney is called the Principal. The power of Attorney gives legal authority to another person (called an Agent or Attorney-in-Fact) to make property, financial and other legal decisions for the Principal.

A Principal can give an Agent broad legal authority, or very limited authority. The Power of Attorney is frequently used to help in the event of a Principal's illness or disability or in legal transactions where the principal cannot be present to sign necessary legal documents.

Power of Attorney does not give the attorney authority to make decisions about your health care. It covers financial and legal matters only.

There are more types of powers of attorney:

Nondurable (often used for a specific transaction, like the closing on the sale of residence, or the handling of the Principal's financial affairs while the Principal is traveling outside of the country.)

Durable (may be used immediately, and is effective until it is revoked by the Principal, or until the Principal's death.)

Springing (becomes effective at a future time and remains in effect until the Principal's death, or until revoked by a court.)

"Durable" and "Springing" Powers of Attorney are frequently used to plan for a Principal's future incapacity or disability and loss of competence resulting, for example, from Alzheimer's disease or a catastrophic accident. A "Nondurable" Power of Attorney enables a Principal to decide in advance who will make important financial and business decisions in the future.

Whether "Nondurable," "Durable," or "Springing," a Power of Attorney can be used to grant any, or all, of the following legal powers to an Agent:

Buy or sell your real estate

Manage your property

Conduct your banking transactions

invest, or not invest, your money

Make legal claims and conduct litigation

Attend to tax and retirement matters

Make gifts on your behalf etc.