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Balancing the Checkbook.

WHAT IS A “POWER OF ATTORNEY”?

A “Power of Attorney” is a written authorization to represent or act on another’s behalf in private affairs, business or some other legal matter. This written authorization may also be referred to as a “Durable Power of Attorney” of a “Financial Power of Attorney”. The person authorizing the other to act is the “Principal” and the one authorized to act is the “Agent” or “Attorney-in-Fact”. The Agent or Attorney-in-Fact is a fiduciary (a person who holds a legal or ethical relationship of trust and prudently takes care of money for another person) for the Principal, so the law requires them to be completely honest with and loyal to the Principal in their dealings.

When a Power of Attorney states that the Principal wishes the document to remain in effect even after they become incapacitated, then it is called a “Durable” Power of Attorney. Understand however, that the Principal may only create a Power of Attorney if they have the requisite mental capacity at the time of creation; thus, if someone is already incapacitated, then it is not possible for them to execute a valid power.

In the event that someone does not have the capacity to execute a Power of Attorney (and does not already have a Power of Attorney in place), often the only way for another to act on their behalf is to have a Court impose a Guardianship. A “Guardianship” is essentially a legal relationship between an incapacitated adult – called the “Ward” – and a “Guardian”, who is appointed by a Court to make decisions on the Ward’s behalf. After such a Guardianship is obtained, the Ward cannot revoke it; keep in mind, however, that there are situations wherein “temporary” Guardianship is granted which can be terminated after achieving a certain purpose.

 

Photo courtesy of FreeDigitalPhotos.com; Bualberto107

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