A Power of Attorney (POA) is a legal document that authorizes someone to act on your behalf. For example, if you become seriously ill or injured, you will probably need someone to care for your needs and personal affairs. This can be done through a power of Attorney.
You can assign a Power of Attorney to anyone you choose. For example, you can give that person authority to carry out only specific actions or transactions, or you may allow the person to act on your behalf in all matters, including your living will.
All POAs are not created equal. Each type gives your attorney-in-fact—the person who will be making decisions on your behalf—a different level of control.
What are Different Types of Power of Attorney?
- General Power of Attorney: A general power of Attorney allows a person or organization (known as an agent or attorney-in-fact) to act on your behalf. These powers include handling financial and business transactions, buying life insurance, settling claims, operating business interests, making gifts, and employing professional help. General Power of Attorney is an effective tool if you will be out of the country and need someone to handle certain matters or when you are physically or mentally incapable of managing your affairs. A general power of Attorney is often included in an estate to ensure someone can handle financial matters.
- Special Power of Attorney: Signing an extraordinary power of Attorney can specify exactly what powers an agent may exercise. This is often used when one cannot handle specific affairs due to other commitments or health reasons. For example, selling property (personal and natural), managing real estate, collecting debts, and conducting business transactions are some everyday matters specified in an extraordinary power of attorney document.
- Health Care Power of Attorney: A health care power of Attorney grants your agent authority to make medical decisions for you if you are unconscious, mentally incompetent, or otherwise unable to decide on your own.
- Durable Power of Attorney: Suppose you become mentally incompetent due to illness or accident while you have the power of Attorney. Will the document remain valid? To safeguard against any problems, you can sign a durable power of Attorney. This is a general, unique, or health care POA with a stable provision to keep the current attorney capacity. You might also sign a durable power of Attorney to prepare for the possibility that you may become mentally incompetent due to illness or injury. Please specify in the power of Attorney that it cannot go into effect until a doctor certifies you as mentally incompetent. You may name a specific doctor you wish to determine your competency or require that two licensed physicians agree on your mental state.
Some Salient Features of Power of Attorney
- Duration of Granted Power: A general power of Attorney remains in force unless expressly revoked or determined by either party’s death. An extraordinary power of Attorney will be in force until the specified action is not completed. The duration of the energy will depend upon the type of the Attorney, or there may be a fixed period of power granted by the Principal, which must be included in the deed.
- Revocation of Power of Attorney: A Power of Attorney may be revoked at any time by the Principal or donor by giving written notice to the agent unless it is for a particular fixed period. Revocation is usually possible when the Principal dies, becomes insane, or goes bankrupt. The Principal himself can revoke the Power of Attorney if the Principal and agent over as mutually agree upon the business for which the agent was appointed. In case the Principal has named a spouse or registered domestic partner as his agent, their authority to act under a Power of Attorney is automatically terminated in case of divorce, legal separation, or termination of the registered domestic partnership.
- Registration of Power of Attorney: A Power of Attorney requires authentication as provided under Section 85 of the Indian Evidence Act, which reads: “The Court shall presume that every document purporting to be a power of attorney and to have been executed before, and authenticated by a Notary Public, or any Court, Judge, Magistrate [Indian] Consul or Vice Consul, or representative of the Central Government, was so executed and authenticated.” Authentication means establishing the authorship contemplated by the section; it does not merely mean attestation; it means that the person authenticating it has assured himself of the identity of the person who had signed the instrument and the fact of execution.
- Registration outside India: Power of Attorney executed outside India should be authenticated before any Indian Consulates in that country.
Essential Clauses in a Power of Attorney
While creating a Power of Attorney, it is essential to include specific mandatory clauses depending upon the type of power of Attorney. Some of the crucial provisions that need to be included in the Power of Attorney deed are as follows:
- The name, age, address, and occupation of the person who makes the Power of Attorney, the Principal.
- The person to whom the power is granted is the Attorney.
- The reason for granting a Power of Attorney should be legally valid.
- The date and place of making the Power of Attorney deed and the date it comes into force.
- The date of termination of the power of Attorney is limited by time. If no time is specified, mention whether the Power of Attorney is durable or non-durable.
- If a general power is granted, all the acts and areas of giving it should be mentioned clearly. In addition, it should be specified clearly whether any particular action is not to be done in certain regions. E.g., Suppose general power for property is granted. In that case, the Principal can give the ability to buy or rent any property but may not grant the ability to sell any of his property.
- In Special power of Attorney, the specific act or task that must be done and completed by the Attorney must be mentioned. Also, the time limit within which that act is to be done is to be specified.
Conclusion: The Importance Of Creating A Power of Attorney
The importance of creating a power of attorney is to provide your loved ones with a legal document that allows them to take care of your personal and financial affairs in the event of your death or incapacity.
The most important thing about this document is that it must be created before you are incapacitated or die. If you wait until after, it will be too late, and the person appointed as your power of attorney will not be able to do anything for you.