As an experienced divorce lawyer at BruegelPC, I frequently encounter questions regarding the difference between an attorney-in-fact and a power of attorney. Understanding these terms is essential, especially when navigating legal documents during a divorce. In this article, I’ll clarify the distinctions and explain why knowing them can significantly impact your legal decisions. Stay with me as I break down these concepts in a straightforward and practical manner.
Based on the American Bar Association, a power of attorney is a legal document that gives someone the authority to act on another person’s behalf. An attorney-in-fact is the individual designated by the power of attorney to make decisions for the person who created the document. The attorney-in-fact acts within the limits set by the power of attorney document.
Definition of Attorney-in-Fact
An attorney-in-fact holds the unique authority to make legal or financial decisions on someone else’s behalf.
Let me explain, an attorney-in-fact is someone who gets the power to make decisions, sign contracts, and manage assets just like the person they are representing. This authority comes from a document called a power of attorney and can be customized to give specific or general powers.
The main job of an attorney-in-fact is to act for the person they represent, known as the principal, in situations where the principal can’t act for themselves. This could be due to illness, incapacity, or simply being unavailable. The attorney-in-fact must follow the instructions in the power of attorney document and always act in the best interest of the principal.
In the most basic sense, the powers an attorney-in-fact gets can be wide-ranging or very specific, based on what the principal wants. Common duties include managing money, handling legal issues, making healthcare decisions, and performing other tasks for the principal.
Choosing an attorney-in-fact is an important decision because this person will have significant control over the principal’s affairs. It’s essential to pick someone trustworthy, responsible, and capable of acting with integrity and in the principal’s best interests at all times.
Definition of Power of Attorney
A power of attorney is a unique legal tool that empowers another individual to act and make decisions for you, ensuring your affairs are managed even when you’re unable to do so.
Broadly speaking, a power of attorney lets someone you trust, called your agent, handle your money, legal matters, and other important stuff if you can’t because you’re sick, disabled, or not around. You can give your agent limited power, like only managing your bank account, or broad power over many things.
Generally speaking, it’s very important to pick someone reliable since they’ll make significant decisions for you. You can change or cancel this arrangement anytime as long as you’re mentally capable. Having a power of attorney helps ensure your matters are taken care of according to your wishes if you can’t manage them yourself.
Differences Between Attorney-in-Fact and Power of Attorney
As I mentioned previously, a power of attorney is the legal document that grants an attorney-in-fact the authority to act on behalf of the principal.
Predominantly, the power of attorney document explains what kinds of decisions the chosen person (attorney-in-fact) can make. This might include handling money, making healthcare choices, or dealing with real estate.
The main difference between an attorney-in-fact and power of attorney is simple: the attorney-in-fact is the person who makes decisions for someone else (the principal), while the power of attorney is the document that allows them to do this. The attorney-in-fact must always do what’s best for the principal and follow the instructions in the document.
At the base, the decisions the attorney-in-fact can make can be very specific or very broad, depending on what the principal wants. The principal can also cancel the attorney-in-fact’s authority at any time, either by writing a cancellation of the power of attorney document or by choosing a new attorney-in-fact.
Role and Responsibilities of Attorney-in-Fact
As indicated at the outset, an Attorney-in-Fact can make critical legal or financial decisions, sometimes even with the same authority as if the individual themselves were acting.
To simplify, a person appointed as an Attorney-in-Fact is given specific powers and duties through a legal document called a power of attorney.
An Attorney-in-Fact makes decisions and takes actions for someone else. This can involve handling money matters, signing legal papers, making healthcare choices, and other important jobs.
What an Attorney-in-Fact does depends on what type of power of attorney they have. They must always do what’s best for the person they’re helping and follow any instructions in the power of attorney document.
Fundamentally, an Attorney-in-Fact needs to keep detailed records of everything they do for the person. They must also keep the person informed about important decisions and actions that affect them.
It’s very important for an Attorney-in-Fact to be honest, careful, and responsible. They should ask professionals for advice when necessary and think through their decisions.
In short, an Attorney-in-Fact works to represent and protect the interests of the person who appointed them, making sure their affairs are handled properly and wisely.
How to Create a Power of Attorney Document
Repeating past discussions, first, know that a critical step in creating a power of attorney document is deciding who will be trustworthy enough to serve as your agent.
To put it simply, choose someone you trust to make decisions for you. Next, clearly state what decisions they can make and any limits on their power in the document. Use clear and accurate language to prevent misunderstandings. It’s a good idea to consult a lawyer to make sure the document is legally sound and protects your interests.
Basically, once the document is ready, sign it in front of a notary public and any witnesses required by your state. Give a copy to your chosen person and any other important parties. Keep the original document in a safe, easily accessible place. Remember, a power of attorney is a significant legal tool, so think carefully about your decisions and make sure you understand the consequences before you proceed.
In the End
From our last chat, in understanding the nuances between attorney-in-fact and power of attorney, it is clear that while both involve granting legal authority to make decisions on behalf of another individual, there are key differences in their scope and duration.
What BruegelPC is suggesting to put money into is, prior to designating someone as your attorney-in-fact or granting power of attorney, it is very important to carefully consider the specific needs and preferences of the individual in question. Ultimately, choosing between the two depends on the level of authority desired and the extent of control one wishes to relinquish.
References
Here is the literature that I was using for drafting this article:
- The Power of Attorney Handbook: A Guide to Your Rights and Responsibilities by Karen Anne Rolcik, Sphinx Publishing
- Black’s Law Dictionary by Bryan A. Garner, Thomson Reuters
- Estate Planning: Text, Cases, and Materials by Gerry W. Beyer, Carolina Academic Press