Power of attorney

A power of attorney (POA) or letter of attorney is a written authorization to represent or act on another's behalf in private affairs (which may be financial or regarding health and welfare), business, or some other legal matter. The person authorizing the other to act is the principal, grantor, or donor (of the power). The one authorized to act is the agent, attorney, or in some common law jurisdictions, the attorney-in-fact.

Formerly, the term "power" referred to an instrument signed under seal while a "letter" was an instrument under hand, meaning that it was simply signed by the parties, but today a power of attorney does not need to be signed under seal. Some jurisdictions require that powers of attorney be notarized or witnessed, but others will enforce a power of attorney as long as it is signed by the grantor.

The term attorney-in-fact is used in many jurisdictions instead of the term agent. That term should be distinguished from the term attorney-at-law. In the United States, an attorney-at-law is a solicitor who is also licensed to be an advocate in a particular jurisdiction. An attorney-in-fact may be a layperson and is authorized to act pursuant to the powers granted by a power of attorney but may not engage in acts that would constitute the unauthorized practice of law.

In the context of the unincorporated reciprocal inter-insurance exchange (URIE) the attorney-in-fact is a stakeholder/trustee who takes custody of the subscriber funds placed on deposit with him, and then uses those funds to pay insurance claims. When all the claims are paid, the attorney-in-fact then returns the leftover funds to the subscribers.

The Uniform Power of Attorney Act employs the term agent. As an agent, an attorney-in-fact is a fiduciary for the principal, so the law requires an attorney-in-fact to be completely honest with and loyal to the principal in their dealings with each other.

An attorney has power to act on behalf of the person; this power can be misused, for example, to steal the assets of a person who may be vulnerable (e.g. elder abuse) or absent.

A person, known as the grantor or donor in different jurisdictions, can only create a power of attorney if they have the requisite mental capacity. In some powers of attorney the grantor states that they wish the document to remain in effect even after they become incapacitated, creating a durable or lasting power of attorney. If someone is already incapacitated, it is not possible for that person to execute a valid power, although in some jurisdictions, it may be possible for someone to have the capacity to execute a power of attorney even if they do not have the capacity to make the decisions that they are delegating. If a person without a durable power in place does not have the capacity to execute a power of attorney, the only way for another party to act on their behalf may be to have a court impose a conservatorship or a guardianship.

Depending on the jurisdiction, a power of attorney may be oral and, whether witnessed, will hold up in court, the same as if it were in writing. For some purposes, the law requires a power of attorney to be in writing. Many institutions, such as hospitals, banks and, in the United States, the Internal Revenue Service, require a power of attorney to be in writing before they will honor it, and they will usually keep a duplicate original or a copy for their records. Nursing homes often follow the same practice.