A power of attorney is a legal instrument that allows a person to delegate their legal authority to another. The person who signs (executes) the power of attorney is known as the director, while the person receiving the authority is called an Agent or de facto attorney. This document grants the Agent the ability to make decisions on behalf of the Principal in regards to property, finances, and other legal matters. There are three types of power of attorney: non-durable, durable, and emergency.
A non-durable power of attorney takes effect immediately and remains in force until it is revoked by the Principal or until they become mentally incapable or pass away. This type of power of attorney is often used for a specific transaction, such as closing the sale of a residence or handling financial affairs while the Principal is out of the country. A durable power of attorney allows the Agent to act on behalf of the director even after they are no longer mentally competent or physically capable of making decisions. This type of power of attorney can be used immediately and remains in effect until it is revoked by the Principal or until their death.
It's important to only give a power of attorney to someone you trust completely. Additionally, never let anyone force you to sign a power of attorney. Allowing your Agents to act separately can ensure that one is always available to act on your behalf, but it can also lead to confusion and disagreement if Agents do not communicate with each other or if one believes that the other is not acting in their best interest. The Agent named in a power of attorney is your representative, not your boss. As long as you have the legal capacity to make decisions, you can instruct your Agent to do only what you want done.
You may also authorize transfers or gifts of property for estate planning and other valid purposes. In New York State, Abbreviated Powers of Attorney allow Agents to make donations to family members if authorized by the Principal in the power of attorney. It's also possible to customize a power of attorney to allow Agents to make donations to non-family members. It's important for Agents to keep accurate records of all transactions made on behalf of the Principal and provide them with periodic accounts. The Principal can also instruct their Agent to account to a third party if they are unable to review the accounting themselves. If an Agent does not follow instructions, the Principal must notify their bank or other financial institution where their Agent has used the power of attorney that it has been revoked.
If a power of attorney is used in a real estate transaction, it must be filed in the county clerk's office and any revoking must also be filed there. The signature on a power of attorney must be attested by a notary public and there are no special requirements necessary for someone to act as an Agent, except that they must not be a minor or otherwise incapacitated. It's best to choose someone you trust with integrity over financial acumen. A permanent power of attorney is an alternative to guardianship only if it is granted before you become mentally incapacitated. To grant a power of attorney, you must have the mental capacity to understand what you are doing and once you've lost that capacity, it's too late for you to grant one. At that time, the court will have to appoint a guardian or conservator for you if necessary. If you are ever asked to act as someone's Agent, it's important that you consult with an attorney about what actions you can and cannot take and any precautionary measures you should take in order to minimize any potential disputes over your actions.
As an Agent in a power of attorney, you are considered a fiduciary with strict standards of honesty, loyalty, and openness towards the director. If you own real estate or valuable personal property in another state, it's important that you consult with an attorney about your power of attorney so that it adequately covers such assets. Additionally, if you are buying or selling assets and do not want to appear in person for closing, you can take advantage of a power of attorney document.