Power of Attorney

A power of attorney is a written legal instrument in which one person, the principal, authorises another person, the agent or attorney, to act on their behalf in specified financial, legal or personal matters. The scope of a power of attorney can be broad, covering virtually all of the principal's affairs, or narrow, limited to a single defined act, such as signing documents for a specific property transaction.

A power of attorney's terms can specify exactly when it takes effect and when it expires; if no expiry is stated, it typically ends automatically when the principal dies, since the authority granted exists only to act on the principal's behalf while they are legally capable of granting it.

A power of attorney works like handing someone a signed, specific permission slip to make decisions or sign documents in a person's place, for exactly the matters and exactly the period the document describes. It does not transfer ownership of anything; the agent is acting on behalf of the principal, not acquiring the principal's assets or rights for themselves.

Banks and other institutions typically insist on seeing the actual power of attorney document, and sometimes require their own specific forms, before allowing an agent to transact on a principal's account, precisely because the authority granted needs to be verified carefully before being relied upon.

• A general power of attorney, covering a broad range of the principal's financial and legal affairs.
• A specific, or limited, power of attorney, restricted to a single transaction or defined set of tasks.
• A durable, or lasting, power of attorney, which continues to apply even if the principal later loses mental capacity, unlike an ordinary power of attorney, which typically ends at that point.

Unless structured as a durable or lasting power of attorney, the authority generally ends automatically if the principal becomes mentally incapacitated, and in all cases it ends on the principal's death, after which any further decisions fall to an executor acting under the principal's will or under the rules of probate.

Banks and other financial institutions generally apply careful internal procedures before allowing an agent to act under a power of attorney, including verifying the document's authenticity, confirming it has not been revoked, and sometimes requiring the institution's own supplementary forms to be completed alongside the external legal document. This caution exists because a power of attorney grants real authority over someone else's money, and institutions face liability if they allow an agent to act under a document that is invalid, outdated or improperly executed.

Principals setting up a power of attorney are generally advised to check directly with their own bank about any specific requirements it has, since requirements can differ between institutions even within the same country.

A power of attorney can be structured to take effect immediately upon signing, or as a springing power of attorney, which only becomes active upon a specified future event, most commonly the principal becoming mentally incapacitated as confirmed by a medical assessment. A springing arrangement appeals to principals who want the reassurance of having a plan in place without granting an agent any authority to act while they remain fully capable themselves, though it can introduce delay if the triggering event, such as incapacity, needs to be formally established before the agent can begin acting.

Choosing between an immediate and a springing power of attorney is a decision many people make with the guidance of a solicitor, weighing the value of having authority available without delay against the comfort of retaining full personal control until a clearly defined triggering event occurs.

A principal can generally revoke a power of attorney at any time while still mentally capable, simply by providing written notice to the agent and to any institutions that were relying on the document, after which the agent's authority to act on the principal's behalf immediately ends.