What is a Power of Attorney?

A Power Of Attorney (POA) or letter of attorney is a written authorization to represent or act on another's behalf in private affairs, business, or some other legal matter, sometimes against the wishes of the other. The person authorizing the other to act is the principal,grantor, or donor (of the power). The one authorized to act is the agent or, in some common law jurisdictions, the attorney-in-fact (attorney for short).

Various types of Power of Attorney documents allow for more flexibility in granting specific rights to the “Agent”, as well as restricting the “Agent” to perform only specific actions, within the outlined scope of the granted authorization. At the same time, Power of Attorney document can assign broad, and even unlimited, powers to the “Agent”. The person who creates a power of attorney, known as the grantor, can only do so when he/she has the requisite mental capacity. Suppose the grantor loses capacity to grant permission after the power of attorney has been created (for example, from Alzheimer's disease or a head injury in a car crash); then the power will probably no longer be effective. In some powers of attorney the grantor states that he/she wishes the document to remain in effect even after he/she becomes incapacitated. This type of power is commonly referred to as a durable power of attorney. If someone is already incapacitated, it is not possible for that person to execute a valid power. If a person does not have the capacity to execute a power of attorney (and does not already have a durable power in place), often the only way for another party to act on their behalf is to have a court impose a conservatorship or a guardianship.In order for a power of attorney to be a legal document it must be signed and dated at a minimum by the principal. This alone, however, is not usually considered sufficient if the legality of the document is ever challenged by a third party. Having the document reviewed and signed (and often stamped) by a notary public increases the likelihood of withstanding such a challenge. There are few types of POA, most common are:  

  • Durable power of attorney - Under the common law, a power of attorney becomes ineffective if its grantor dies or becomes "incapacitated," meaning unable to grant such a power, because of physical injury or mental illness, for example, unless the grantor (or principal) specifies that the power of attorney will continue to be effective even if the grantor becomes incapacitated. This type of power of attorney is called "power of attorney with durable provisions" in the United States. In effect, under a durable power of attorney (DPA), the authority of the attorney-in-fact to act and/or make decisions on behalf of the grantor continues until the grantor's death.
  • Health care power of attorney - In some jurisdictions, a durable power of attorney can also be a "health care power of attorney." This particular affidavit gives the attorney-in-fact the authority to make health-care decisions for the grantor, up to and including terminating care and life support. The grantor can typically modify or restrict the powers of the agent to make end-of-life decisions. In many jurisdictions a health care power of attorney is also referred to as a "health care proxy" and, as such, the two terms are sometimes used interchangeably.