By: Barry E. Haimo, Esq.
March 29, 2016
Who Are the Parties in a Power of Attorney?
If you are ever incapacitated or unable or unavailable to perform an activity, you may want to consider a Power of Attorney. A Power of Attorney is an advance care directive that permits another person to act on your behalf in a variety of financial and administrative situations and circumstances. Click here for more information on advance care directives.
A Power of Attorney can be incredibly powerful instrument, so it is essential that you fully understand the legal rights you are giving to someone else. You also need to know exactly who will be involved in a Power of Attorney.
Let’s look at the various parties and what their roles are.
The principal. The principal is the creator of the Power of Attorney. The idea is that he or she can delegate authority to another person who then acts on the principal’s behalf. Establishing a Power of Attorney can be especially helpful in the event the principal is incapacitated or incapable of doing something.
For example, if you have a house in another state and want to sell it, you may want to draft a Power of Attorney that allows someone geographically closer to sell the house since you aren’t in the area as a matter of convenience. If you are incapacitated, you may want a Power of Attorney to handle all of your finances, including paying your bills, accessing your bank accounts, and making other necessary financial decisions.
The agent or attorney-in-fact. The agent – also called the attorney-in-fact – is given the power to act on the principal’s behalf. Anyone who is at least 18 years old and deemed legally competent can be an agent. Certain financial institutions with trust powers can also be agents.
When deciding on an agent for a Power of Attorney, you want to make sure you choose the best possible agent for your needs. Some people will simply be better at handling certain tasks than others. But regardless of what you need your Power of Attorney to do, your agent should be someone who you completely trust and who will always act in your best interest. For this reason, some people choose their spouse to be their agent. Other people might choose a family member or close friend. Whomever you choose, make sure they will be able to handle the responsibility that comes with being an agent.
Other Parties in a Power of Attorney
Besides the principal and the agent, there may be other people or parties involved with the document, particularly in the creation of it.
Notary and witnesses. In order to be properly executed, the Power of Attorney needs to be signed by the principal and two witnesses to the principal’s signature. A notary also has to acknowledge the principal’s signature for the Power of Attorney to be valid under Florida law. The witnesses are only there to confirm that the principal signed the Power of Attorney in their presence and in the presence of each other, and that the Principal has the capacity to do so. They do not have any power conferred upon them.
Third party. A third party is often referred to as the person or institution the agent deals with on behalf of the principal. A third party could be a bank, broker, property buyer, insurance agent, or anyone the principal grants the agent power to deal with. As long as the Power of Attorney is valid, a third party generally must honor the document.
Attorney. Since a Power of Attorney grants another person so much power, an experienced attorney should be the one to draft it to ensure that it explicitly meets all of your needs. Along with a Power of Attorney, a qualified attorney will also be able to assist you with other important documents to include in your estate plan.
Barry E. Haimo, Esq.
Strategic Planning With Purpose
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