‘Power of Attorney’ (POA) is a formal instrument by which a person (the Donor) authorizes or empowers another person (The Donee) to do things or act in his stead. It represents a wilful, conscious and personal wish of a person to make another act on his behalf, devoid of undue influence, coercion or intimidation. It has far-reaching advantages and implications in respect of professional consultancy and/or procurement of professional briefs.
Professional briefs are said to be at their best when commissioned through the execution of an instrumentality of a power of attorney. Essentially, it accords a legal effect in the relationship, engagement or authorisation that issue from the donor. To this end, the professional does not function at the mercy of the donor, particularly when the Power of Attorney is expressed to be irrevocable or given for valuable consideration. An irrevocable power of attorney is the one that cannot be revoked by the donor until the purpose is discharged or accomplished.
POA provides the donee with the necessary platform, basis or locus for going about the successful accomplishment or conduct of what is stipulated in the grant. Importantly, he relies on it to enforce his rights under the transaction whenever there is the need. Power of attorney is vital in the commissioning of professional briefs particularly where virtually nothing is guaranteed, agreements are not respected, there is so much dishonesty, etc. Consequently, by means of POA, the professional protects his briefs with a legal coating; given that the POA is a strong legal instrument, once stamped and registered accordingly. The law will always protect a vigilant person.
A POA document is an extremely important part of estate planning yet one of the most misunderstood. To start with, many people confuse the power of attorney (POA) with a will, but these documents are two very different things and have two very different functions. A will goes into effect on the day the property owner dies. A POA applies during the owner’s lifetime and ceases to apply when he/she dies. So there is actually a need for both a POA and a will as they complement, and do not overlap, each other.
In summary, the relevance of POA:
- is backed up by law and could be needed at any point time.
- is used as an evidence of representation on behalf of someone
- contains the extent to which the power of Attorney can be relied upon
- states the fee receivable by the Donee
The nature of power of attorney
There are two types of POA one for property and one for personal care. These two types are completely separate. They deal with different areas of life and both are required for effective estate planning
- Power of attorney for property: This is a legal authority given to a vendor or the person in charge or representing the owner of the supposed property. This legal right is given to the person to be a full representative to the property. It is a right that is vested to the representative through legal documentation starting with the person’s name and useful detail of the person. It is like a warrant to be able to sell or lease a property on behalf of the owner or landlord. It is relevant to professional brief in that such documents are given to accredited person(s). For instance, in the sale/lease of a property, if the owner of the property has travelled and there is a transaction that must take place. The representative or the person given full rights to do the transaction on behalf of the landlord will handle the transaction. The person to whom that document is issued must be trustworthy, smart and be able to handle transactions with little or no supervision. Lawyers and Estate agents are not the only ones thus empowered; anyone with good understanding can handle such transactions. They are liable for any problems faced in the property, unless stated otherwise in the statement.
A POA for property gives the designated “attorney” to the person named on the POA document as the owner’s decision maker, legal control over all the property belonging to the property owner. “Property” refers to both real property (real estate) and personal property (all other assets including stocks, and bank accounts).
The purpose of a POA is to make it easy for a designated attorney to access finances and, in that way, take care of the subject property. Accordingly, designated attorney has the right to perform such tasks as:
- Removing money from client’s account
- Selling or mortgaging the owner’s property.
- Selling owner’s stocks and bonds
POA goes into effect the day it is signed and it is therefore essential that the property owner reserves great confidence in the designated attorney. They must be someone who can be trusted, without reservation, to use the property for the owner and not for themselves, or anyone else. It should be specified in the POA document that the owner must be mentally sound for the POA to take effect. In all cases, the property owner should endeavour to choose someone who is good at managing money to be his/her POA. Your partner may not be the best choice if you know they have difficulty with money. However, if a partner is trustworthy with money, they may be the perfect choice.
- Power of attorney for personal care: A POA for personal care gives the designated agent or representative, the power to make decisions on behalf of another person in relation to medical issues, hospitalisation and long term care when such person is no longer capable of making such decisions himself. In the case of a POA for personal care, it is a doctor who determines whether you are able to make such decisions. If you have specific wishes for a particular treatment or plan of care, such a person can write them directly into his POA document if the wishes are included in the POA document or if he expressed his wishes verbally; the appointed individual is required by law to make decisions based on those wishes. In the absence of any specific wishes, the agent or representative is left to make decisions based on what they consider to be in the best interests of their clients.
Duties of the designated agent to his principal
The “document of appointment” creating contractual relationships between a property owner and his/her property manager or agent must be well defined. In addition, property manager owes the following duties to his principal.
- Obedience: The agent is liable to damages upon failure to perform his agency, he is not liable though if he fails to perform an act which is considered illegal or voidable. A property manager who collects rent for his/her principal; such money must not be spent on repair without the consent of the property owner.
- Care and skill: As a professional, certain level of degree of care and skill is expected of him. Hence, it is in the interest of the property manager to bring to bear his best endeavours and skill in the efficient management of the property in his care.
- Personal performance: The rule here is “delegates non potest delegate”. The property manager is presumed that they are entitled to engage sub-agents for the adequate and proper execution of the agency. The specialised services connected with the management of the property are the only ones that require the appointment of sub-agents otherwise the expected duties meant to be performed personally should not be delegated.
- Good faith: Good faith in this context means utmost good faith “Uberima-fidei”. The property manager stands in a fiduciary position to the property owner/principal. In this case, his personal interest must not conflict with his professional duty and must not therefore make secret profit to the detriment of his/her principal.
- Duty to account: There must be proper accountability of all incomes received by him/her on behalf of his principal.
Power of Attorney Documatica Legal Forms, Inc. (2011) http://www.documatica-forms.com/usa/power-of-attorney/more-info.php Power of attorney is a legal document that is used to give legal authority to someone else (such as a relative or friend) to make decisions or do certain things on your behalf. The person who signs the Power of Attorney (gives up the authority) is called the Principal, and the person who is given the authority is called the Agent or Attorney-in-Fact. There are many reasons one may decide to make a Power of Attorney, such as illness, disability, or cases where the Principal is travelling and cannot be present to sign legal forms. A Power of Attorney does not necessarily mean that the Principal can no longer make decisions – it just means that another person may act for them also. The Principal may revoke the Agent’s authority at any time if he or she is not satisfied with the Agent’s performance. Common examples of Powers granted to an Agent include the following: · Managing your money, bank accounts, and safety deposit boxes · Selling, mortgaging, and managing your property · Entering into contracts on your behalf, settling claims · Filing tax returns and handling government benefits · Maintaining business interests · Planning your estate and financial gifts Because the Agent has an important job, often there is an additional clause in a Power of Attorney to appoint a second Agent should the first Agent be unwilling or unable to perform his or her duties. This person is called a ‘Successor Agent’ or ‘Successor Attorney-In-Fact’.
There are several subtypes of Power of Attorney. One type, a Health Care Power of Attorney (not discussed here), is used to specify who will make health care decisions for the Principal if they become incapacitated. A Power of Attorney can be General (allowing the Agent to act in many situations) or Specific (limiting the Agent’s power to a few specific areas). The timing of a General or Specific Power of Attorney can also be adjusted. A Non-Durable Power of Attorney comes into effect immediately and stays effective until the Principal revokes it, or becomes incompetent or dies. This type of document is often used for a specific transaction. A Durable Power of Attorney enables the Agent to act for the Principal even after the Principal is not mentally competent or physically able to make decisions. This document may also come into effect immediately and can also be revoked by the Principal or at the time of the Principal’s death. Finally, a Springing Power of Attorney is designed to become effective only upon the occurrence of a certain event chosen by the Principal (such as illness or disability). Often, this document depends upon the Principal’s assessment by a physician that he or she is no longer competent to handle financial affairs. This document may be revoked by a court, or by the death of the Principal. Once you have decided on which type of Power of Attorney you wish to create, you will need to get the document properly signed. The Principal must be mentally competent at the time of signing (so he or she can truly understand the powers given up), and a physician assessment should occur if there is any doubt of the Principal’s competence. Furthermore, the document should also be notarized. Notarization helps ensure that the proper parties are signing the document, and that each party understands the implications of signing. It also adds validity to the document should anyone wish to challenge it. |
- Anyone can designate a power of attorney, no matter what his or her financial or relationship status POA ensures that a person of your choice is the one who retains the undisputed right to make key decisions about your life.
- Make sure you have created both a power of attorney for property and a power of attorney for personal care, in addition to a will.
- Drafting a power of attorney is inexpensive, especially when compared to the expense potentially created by not having one in place when the need arises Cost should not be a reason for you to postpone the process of creating your POA.
- In real estate, power of attorney is a special or limited power of attorney where the Agent will not have such broad powers as in a General Power of Attorney.
- It can be as specific as dealing with a single transaction whilst the client is on vacation or physically unable to be present or it can be a mandate to the Agent to manage property in the client’s portfolio on an ongoing basis.
- Power of Attorney is the one document (unlike other powers of attorney) that must be filed with a government office – the Deeds Office – when used in a transaction. If the client is to revoke such a power of attorney, the revocation must also be filed with the same office and both documents must be notarised.
- It is advisable to put a termination date on any power of attorney. For property management purposes, it should be made for a year or two; hence, or for a specific transaction, the client can date it for his return from holiday.
- An Agent appointed to manage a property on an on-going basis can be expected to provide accounting records from time to time. The client must then however determine how often those records must be provided, whether on a monthly or annual basis and whether it must be submitted to the client directly or to another person in case the client is not available.
- Power of Attorney used in the commissioning of a professional brief is just for a single transaction.
