Power of Attorney: How Important Is It?

Defining Power of Attorney
A legal document that gives an individual (the agent) authority to act in behalf of the other person  (the principal). This is about legal representation, trust and assurance during transactions and decisions on crucial matters such as health, medical directives on proxy, organ donations upon death, consent for child care, consent for bank transactions, right to sell of properties, and declaration of living wills.

Persons involved in a Power of Attorney agreement:

Principal
An individual who signs the Power of Attorney, and thereby gives the appointed individual the authority to act on his or her behalf.

Agent
An person given authority by a Power of Attorney.

Attorney-in- Fact
Refers to the agent. An individual who is given authority by a Power of Attorney.

Types of Power of Attorney

General Power of Attorney
A Power of Attorney that gives the agent very broad powers to oversee, transact and conduct business on behalf of the principal.

Special Power of Attorney
A Power of Attorney that limits the agent's authority to certain specific areas or actions.

Durable Power of Attorney
A Power of Attorney that continues after the principal has been incapacitated.

Springing Power of Attorney
A Power of Attorney that does not become effective until a certain event occurs, such as the incapacity of the principal.