A Power of Attorney (POA) is a legal document that allows an individual (the "principal") to appoint someone else (the "agent" or "attorney-in-fact") to act on their behalf in financial or legal matters. The principal may give their agent the authority to handle specific tasks, such as signing documents, making investments, paying bills, or accessing bank accounts. The principal may also grant the agent broad powers to manage their affairs as they see fit.
The limitations of a POA by law vary by jurisdiction, but generally include the following:
Durability: A POA is typically durable, meaning that it remains in effect even if the principal becomes incapacitated. However, in some jurisdictions, a POA may be "springing" and only take effect if certain conditions are met, such as a determination of incapacity by a doctor.
Agent's duties: The agent is required to act in the best interests of the principal and follow their instructions to the best of their ability. The agent must also keep the principal's assets separate from their own and avoid conflicts of interest.
Termination: A POA can be revoked by the principal at any time while they are still capable. In addition, the POA may specify a termination date or be automatically terminated upon the occurrence of a specified event.
Fiduciary duty: The agent is considered to be a fiduciary, meaning that they owe a high level of trust and loyalty to the principal. The agent is expected to act with integrity, transparency, and prudence in managing the principal's affairs.
Liability: The agent may be held liable for any losses or damages resulting from their mismanagement of the principal's affairs. However, in some jurisdictions, the agent may be indemnified for expenses incurred in good faith.
