Having somebody take care of your business dealings can be real nice. Just think about it. You don’t have to go to your business meeting in say Uganda to sign documents. You can just send a representative with the power of attorney and that person can sign the contract for you. But for all its benefits, the power of attorney can also be a bane when not done the right way and when put into the wrong hands.
What is a power of attorney?
Before we can discuss the advantages and disadvantages of using a power of attorney, you must first understand that exactly is the concept. Power of attorney is a document that gives people the authority to act on another person’s behalf for a specific period and matter depending on what is stated on the paper. This means that another person can sign documents for you and make decisions on your behalf. The person who gives the power of attorney is often called the principal while the grantee is called the proxy or sometimes the agent.
Use of the Power of Attorney
Power of attorney is used within corporations where executives have tightly packed schedules that require them to travel in three different countries in a span of three days. This can either be physically impossible or at best, physically tiring. Thus, the power of attorney serves to lift the burden from the executives, allowing them to become more productive. Company lawyers are often sent or subordinates who are trusted to make decisions and sign the contract.
Another advantage of a power of attorney is its importance in making healthcare decisions. A power of attorney can also be given to people, authorizing them to refuse or allow medical care to the principal if they become incapable of making decisions for themselves. This also includes making the decision to pull the plug in cases when only a machine is keeping the principal alive.
Some people are also given the power of attorney to take care of a principal’s financial portfolio. Although this is well and good especially when you are so busy and want to put the business of investing your money to a professional. But money can turn people dishonest. And here lies the one disadvantage of a power of attorney— putting your trust into one person.
On the downside
Remember that in giving a power of attorney to someone, you are basically telling people who read the document or the contract that you are giving the agent full rights to sign for you and agree or refuse something on your behalf. If the agent turns out to be corrupt, then any transactions that he or she handles is at risk for fraud. This is why although this is a very convenient thing to do; only a few ever use it. Giving that kind of power to one person can be very risky even if you plan to monitor all the transactions made under your name.
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One of the most important considerations in creating a power of attorney is how much power you must grant your attorney-in-fact or agent to protect your properties, finances, and interests from abuse. Since the courts do not regulate powers of attorney, the powers may be misused by an attorney-in-fact. As a principal, you do not want this to happen, which is why you must choose carefully the powers you are going to give to your agent.
You have to decide one or more of the following tasks that your attorney-in-fact will carry out on your behalf from time to time:
• manage your properties
• preparing and filing income tax returns
• making decisions regarding health care
• do transactions at the bank and pay your bills
• handle your retirement and insurance benefits
• collect your social security benefits
• handle your legal claims
You have two options when deciding how much authority you are going to allow to your agent. You can give either a general or a limited power. The right choice depends on your needs and preferences when it comes to managing your affairs.
General powers of attorney provide more authority to an attorney-in-fact than the limited type. Because the control granted to an agent is limitless, the general type has a wider scope than the other one. This means that the agent enjoys the same amount of privileges and access to the assets of the principal. For example, the agent can have access to the safety deposit box of the principal and transfer sales or investments, among other powers.
Entrusting all your assets and personal affairs as a principal is like entrusting your life to your attorney-in-fact. Your agent’s decisions regarding your estate will have a direct impact on you, considering the broad freedom granted by general powers of attorney. The agent will decide, for example, where your money and investments will go as well as the kind of nursing home where you will stay.
Simply put, your attorney-in-fact will be in charge of everything that concerns your life as soon as you become mentally incapacitated. That being said, you must make sure that you appoint someone who is worthy of your trust. Your agent can be your relative or trusted friend who can handle well all concerns regarding your finances and other affairs.
However, if you are not confident about entrusting everything to someone else, you may consider giving a number of limited powers of attorney rather just one general power.
As the term implies, limited powers of attorney grant limited and specific control of an attorney-in-fact over the estate of the principal. With such type of power of attorney, a principal can prepare for certain situations without giving full authority to his or her agent. There are various types of limited powers of attorney. Your choice depends on what aspects of your life need important decisions from someone when you are not able to make decisions for yourself.
Some of the limited powers of attorney involve health care, real estate, medical, and financial.
Power of Attorney Related Articles
- An Insight On The Different Types Of Power Of Attorney
- Choosing an Agent for your Power of Attorney
- Choosing The Best Agent For Your Power Of Attorney
- Essential Information about Durable Power of Attorney
- Frequently Asked Questions about Power of Attorney
- How an Agent in Your Power of Attorney should Manage Your Money
- How Much Power of Attorney Should You Give to Your Attorney-in-Fact?
- Important Considerations When Creating a Financial Power of Attorney
- Medical Issues And Power Of Attorney
- Power of Attorney 101
- Power Of Attorney And Its Validity
- Power of Attorney: A Brief Overview
- Power of Attorney: Should You Get One?
- Power of Attorney: What to Consider in Choosing an Attorney-in-Fact
- Preparing for Your Future? Consider a Health Care or Medical Power of Attorney
- Seven Steps in Preparing a Power of Attorney
- The Pros And Cons Of The Power Of Attorney
- Types Of Power Of Attorney
- Understanding The Power Of Attorney
- Watching It: Power Of Attorney And Problems}
- What Is The Durable Power Of Attorney For?
- What Power of Attorney Is
- Why Do You Need to Prepare a Power of Attorney?