Introduction

The power of attorney (POA) or letter of attorney is a document that enables one person to represent another in private matters, business contracts, or some other matter on another’s behalf. The individual who authorizes the action is referred to as the principal.  Agents, attorneys, or in certain common law jurisdictions, attorneys-in-fact have authority to act.

The term “power” originally referred to an instrument that was signed under seal, whereas the term “letter” referred to a document that was signed by two individuals. However today a power of attorney does not need to be signed under seal. While some jurisdictions require that powers of attorney be notarized or witnessed, others will enforce them if they are signed by the grantor.

It is an authority imposed on an agent by the principal allowing the said agent to make decisions on his/her behalf. The agent can receive limited or absolute authority to act on the principal’s behalf on decisions relating to her property or finances. A POA is common when a person is incapacitated and unable to make their own decisions.

A power of attorney comes into play in the event that the principal is incapacitated by an illness or disability. The agent may also act on behalf of the principal in case the person is not readily available to sign off on financial or legal transactions.

The power of attorney lapses when the creator dies, revokes it, or when it is invalidated by a court of law. A POA also ends when the creator divorces a spouse charged with a power of attorney or when an agent is not able to continue carrying out outlined duties.

Types of Powers of Attorney

 1. General Power of Attorney

The general power of attorney is a broad mandate that gives an agent a lot of power to handle the affairs of a principal. The agent or the person designated to act on behalf of the principal is charged with handling several tasks. The tasks include buying or disposing of real estate or even entering into contractual relationships on the principal’s behalf.

2. Limited or Special Power of Attorney

An individual looking to limit how much the agent can do should choose limited or special power of attorney. Before signing to notarize a limited power of attorney, a person needs to be as detailed as possible about how much the agent should handle. If an individual is not clear what should fall under the special power of attorney, it is best to speak to a legal counsel.

3. Durable Power of Attorney

The durable type of power of attorney is only effective during the period a person wishes to get someone else to act on his or her behalf. A non-durable POA will end the moment it is revoked or when the expiration date specified arrives. However, what will happen in the event the agent becomes debilitated? Will the POA still be applicable?

In such a case, the principal would prefer that the POA remains active even if he or she becomes unable to communicate. For example, if the principal becomes comatose, but would prefer that the spouse be the agent, it can be specified in the form of a durable power of attorney. The POA gives power to the spouse to make decisions even when the principal is comatose.

4. Medical or Healthcare Power of Attorney

If the principal becomes very ill, he or she reserves the right to decide the quality of care preferred. Medical or health care POA authorizes the agent to make decisions on behalf of the principal in case of a life-threatening illness. Most health POAs fall under the durable kind because they take into consideration the fact that the principal may be too sick to make their own decisions.

Rights of power of attorney

1. The attorney may, however, carry out all of the authorized activities, but only in a certain manner, provided the power of attorney so specified.
2. The right to take legal action on the Principal’s behalf, and must sign all necessary legal documents.
3. Receiving income on behalf of the Principal. 
4. Decision-making authority in matters of personal, business, or investment affairs.
5. The authority to create bank accounts, make

1. cheques, and sell property on behalf of the Principal.
2. A solicitor should always be consulted if there is any uncertainty about the power of attorney’s language.
3. The attorney must also operate in the principal’s best interests.
4. An agent may make decisions on behalf of the principal, such as paying the principal’s rent or mortgage, hiring workers to maintain the principal’s home, or hiring an attorney to represent the principal. 
5. In a health care power of attorney instrument, an agent has a responsibility to behave responsibly in regards to their principal’s health care desires. Even if the parties have opposing moral positions, the agent must operate in accordance with the principal’s intentions.
6. The principal can allow an agent to handle a variety of activities through one or more powers of attorney, including entering into contracts, dealing with real and personal property, administering the principal’s financial and tax affairs, and arranging for the principal’s housing and health care.
7. All financial transactions must be accurately recorded in the power of attorney’s books and records. The word accurately recorded implies that not just pertinent receipts, but also a complete transactional history of all transactions performed by the power of attorney, must be kept.
8. Expenditures are made from the person’s property for the support, education, and care of legal dependents.
9. Right to handle, compromise, resolve and modify all real estate-related issues.
10. Right to Lease, collecting rentals, granting, bargaining, selling, or borrowing and mortgage.
11. Right to sell all of your stocks, bonds, and other investments.
12. The attorney has the authority to sign all tax returns, insurance papers, and other documents before filing them.
13. Right to make, sign, execute, and deliver any contract, agreement, or document; to enter into contracts and to perform any contract, agreement, writing, or item; to create, sign, execute, and deliver any contract, agreement; to acknowledge any contract, agreement.
14. Right to make decisions about the donor’s or his minor children’s health care.

Limitation of power of attorney

1. An attorney must not go beyond the scope of the power of attorney. If the attorney goes above his or her powers, he or she may be held responsible for any harm the donor or others incur.
2. The attorney will be responsible to the donor if he breaches any requirement unless he behaves reasonably.
3. At any moment, the POA cannot delegate authority to another Agent.
4. After the Principal’s death, the POA is no longer able to make legal or financial decisions, and the Executor of the Estate assumes control. 
5. Following the Principal’s death, the POA is unable to disburse inheritances or transfer assets.
6. The POA has no authority to alter or nullify the Principal’s  Will or other Estate Planning papers.
7. The POA cannot alter or breach the provisions of the nomination paperwork; otherwise, they risk being held liable for fraud or carelessness.
8. The POA cannot act in any way that is not in the best interests of the Principal.
9. The POA will not be able to make decisions until the agreement is in force; conditions will be imposed with the approval of the Agent and Principal.
10. Unless the Principal is in excellent physical and mental health, the POA cannot be lawfully chosen.
11. The POA is not allowed to use the Principal’s assets or money as if they were their own.
12. The POA cannot be paid more than the amount stipulated in the POA agreement.
13. In addition, the agent must avoid any potential conflicts of interest. Unless the principal and the agent mutually hold the property before writing the power of attorney, the agent cannot commingle or merge their property with the principal’s property.