Pros and Cons of Giving Power of Attorney to Someone you Trust
In a very general sense, a power of attorney is a legally binding contract between two parties, which gives one party (the agent) the authorization to act on behalf of the other party (the principal). There are several different types of power of attorney a person may choose to authorize.
The contract for power of attorney can be verbal or written. Either form is recognized in a court of law in the United States.
Most of the time, a power of attorney contract becomes null and void when the grantor (the principal) becomes incapacitated to such a point he or she would be unable to mentally or physically grant such power to a second party or upon the principal’s death.
One form of power of attorney is a special, or limited, act. This type of contract gives the agent limited power to act on the behalf of the principal. In most cases, it limits the agent to actions taken during a limited amount of time or for a limited scope of action.
A durable power of attorney is often called a healthcare power of attorney or a living will. It grants the power of the agent to make decisions on behalf of the grantor even after he or she is no longer able to do so personally. Medical care and treatment options, as well as legal and business matters, are granted to the agent in a durable power of attorney.
A springing power of attorney becomes effective only upon the decline in health or mental capacities of the principal. It, in effect, springs into action once the principal is no longer able to make such decisions on his or her own.
When drafting a springing power of attorney, it is important to specify exact terms of the contract. US legislation on medical privacy often limits the information a medical practitioner is allowed to give to the principal when a power of attorney grants medical decisions to the agent named in the legal document.
A power of attorney contract can be either revocable (can be cancelled by the principal) or irrevocable. An irrevocable power of attorney can be broken only under circumstances specified in the contract or by other legal principles cited in a court of law.
When a power of attorney is revoked, it is the principal’s responsibility to inform all third parties that the contract is no longer in effect. Otherwise, the principal can still be held legally responsible for the actions of the agent named in the now-cancelled power of attorney.