A Power of Attorney is a legal instrument to be signed by a person who wishes to authorize someone to act as his (grantor's) agent, with respect to handling and dealing with the decisions based on his finances, investments and other fiscal arbitration. It allows the granter to delegate his rights to the authorized person for managing and taking decisions on the granter's name, which may be an individual or a joint authority. The authorized party in this is called "Attorney in Fact".
Power of Attorney can be classified into two categories:
1) Springing Power of Attorney: This power of attorney is not decided by an individual, but by some legal authority, doctors and licensed medical practitioner, where if that individual is declared to be mentally incapable and is not able to manage and maintain his funds, and other monetary resources in right way, then his/her "Attorney in Fact" can take the potency to execute the actions on his behalf. The problem with this type of Power of Attorney is that it may hold up with the bill payments, and other monetary actions regarding finances like investment, etc. till the time, the legal documents have been prepared, signed and ready to be declared for the actions.
2) Durable Power of Attorney: This is the regular Power of Attorney that comes into effect, the moment an individual signs it. The "Attorney in Fact" will instantaneously get the authority to plan, execute, manage and maintain the resources, investments and other decisions regarding the individual's finances. The good thing about this type of power of attorney is that it is fast, can come into action without having any intermediate delays or need of any additional things and factors like medical reports, judge's decision, etc.
Certain considerations governing the Power of Attorney are described as follows:
1) Who can make the Power of Attorney? 2) What are the minimum stipulated conditions that can make Power of Attorney legally applicable? 3) Who are the people eligible for being called as "Attorney in Fact" and who are not? 4) Defining the formalities to be followed while signing the Power of Attorney.
Power of Attorney with respect to the Revocable Living Trust:
If an individual possesses a Revocable Living Trust and has invested his/her assets in it that are funded in a proper way, the investments and administration of the trust capital will be regularized by his/her trust agreement. Hence, the individual remains the initial Trustee in a regular way for dealing with his trust property, the charge will go in the hand of his Disability Trustee, in case he becomes mentally challenged and further to his Administrative Trustee, in case of death.
Aside this, for any of the individual's assets that are not financed into his Revocable Living trust, he will proceed to hold the first authority and this can not be extended to any of the other trustees. Therefore, the individual's Power of Attorney is required to go forward in empowering someone to manage the investments of this unfunded property. Once an individual dies, the Power of Attorney becomes invalidated and the legal bureau of the individual's "Attorney in Fact" to handle and deal with the assets is rescinded. In such kind of situation, the particular assets of an individual are needed to be prorogued.
Power of Attorney is a very crucial and delicate matter, and needs to be executed with utmost care and concern. The powers and rights to be granted to an authorized person should be clearly stated and validated by a legal jurisdiction before signing it off.
