A power of attorney is used to appoint an "attorney-in-fact" to make financial decisions on your behalf if you are unavailable, or become incapacitated.
Powers of attorney are based on the legal relationship between "principals" and "agents". When you sign a power of attorney, you are the principal, and the person you appoint (the "attorney-in-fact") is your agent. This legal relationship means that your attorney-in-fact can only act on your behalf, and never for their own benefit. It also means that you can revoke a power of attorney at any time, and the legal relationship between you and your agent terminates upon death.
Powers of attorney can be "limited" or "general", and "immediate" or "springing". In other words, there is no limit to their flexibility. But it is important to draft a power of attorney with great care. A power of attorney can only be used when it is accepted voluntarily by the person to whom it is being presented.
For example, suppose an attorney-in-fact wanted to sell a car for a principal who no longer needed it. A prospective buyer of the vehicle must be willing to accept a power of attorney as proof that the attorney-in-fact has the legal authority to sell the car. If the power of attorney is not properly drafted for this purpose, or if the buyer does not trust the document, then he or she cannot be forced to accept it. In that situation, the sale of the vehicle will not take place.
John P. Tamboer, attorney
Estate Planning Law Group
5088 Corporate Exchange Blvd.
Grand Rapids, MI 49512