Power of attorney (POA) is a document which states that the elected person has the power to act on your behalf while conducting any transaction of importance. The person to whom it is granted is called the agent or the attorney-in-fact, while you remain the principal. On sanction of such a document, the agent is expected to act with complete honesty and integrity while dealing on behalf on the principal.
In some types of power of attorney, the principal can still make decisions after signing a POA, which the agent will have to follow. The time frame of the power of attorney can be limited, joint, or long-term in nature. For instance, if you are hospitalized and incapable of making any transactions, you can grant the power of attorney to a family member for that period only. Let's take a look at some of the benefits of power of attorney.
Benefits of Power of Attorney
In companies where the board of directors do not have the time to be present at every meeting, it gets difficult to make important decisions. Also, it is impossible to communicate the cases to them, listen to their point of view, narrow down on decisions and then clinch the deal. In such cases, power of attorney plays a crucial role by saving time and expediting the subsequent actions. Company lawyers are often granted the power of attorney, who also draft the power of attorney templates, to sign on the behalf of the senior managers. This eases the burden off the managers as it saves the effort of being present at every company meeting.
The next power of attorney benefit is its significance while making health related decisions. Known as the medical power of attorney, it is signed by the principal designating the trusted person to make health care decisions in good faith. The agent can make decisions related to principal's health only when the latter is medically incapable of making them for oneself. However, the medical power of attorney limits the agent from making decisions related commitment to a mental institution, convulsive treatment, psycho surgery, abortion and neglect of comfort care. On the other hand, the authority bestowed on the agent gives him the power to pull the plug-in case the principal is on life support.
The other reasons for granting a power of attorney is when the principal cannot manage finances on his own. Giving the power to manage your finances to a professional to act on your behalf while selling property, investing in share market or to manage your assets can help you get a professional opinion on such matters and add to your profits due to your agent's expertise.
Many times, when couples are engaged in long distance relationships due to professional reasons, power of attorney proves to be the biggest benefit. It allows either of the spouse to handle the finances, claim a bank account, use the money in case of emergency and run a household if the need be. It also shows the relationship of trust you share with your partner.
The first and foremost power of attorney benefit is the relationship of trust you build with the agent. It provides a platform to discuss some of your private matters with the agent, which brings transparency in the relationship. Additionally, by discussing the matters both principal and the agent can get a fresh perspective about the issue at hand. There are two types of power of attorneys, namely, durable and non-durable power of attorney. The former becomes effective immediately, while the latter comes to effect only when the principal is incapacitated. Thus, while drafting your power of attorney you can use either of the two to you benefit.