Who Are the Parties in a Power of Attorney?

by | May 18, 2021

Who Are the Parties in a Power of Attorney?

By: Barry E. Haimo, Esq.
May 18, 2021

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. They are particularly useful if you are ever incapacitated or unable or unavailable to perform an activity. Click here for more information on advance care directives.

A Power of Attorney can be an incredibly powerful instrument, so it’s essential you fully understand the legal rights you’re 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.

Power of Attorney: Parties and Roles

The principal. The principal is the creator of the Power of Attorney. He or she delegates authority to another person who then acts on their behalf. Why would someone want to do this?

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. If you become 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 the entity 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 choose the best possible entity for your needs. Some agents are better at handling certain tasks than others.

Regardless of what you need your Power of Attorney to do, though, they should be someone you completely trust to always act in your best interest. For this reason, some people choose their spouse to be their agent. Others 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 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. This way, you can ensure it 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.

Originally published 3/29/16. Updated 5/18/21.

Author:
Barry E. Haimo, Esq.
Haimo Law
Strategic Planning With Purpose®
Email: barry@haimolaw.com

YouTube: http://www.youtube.com/user/haimolawtv

 

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