A power of attorney is a legal document in which the maker of the document (the principal) gives another person (known as the agent, or attorney-in-fact) legal authority to act on his or her behalf under certain circumstances, which are clearly defined within the document. Powers of attorney can be broad in nature, or strictly limited to certain duties, such as making health-care decisions or carrying out financial transactions.

The document must be created and executed while the principal is legally competent, and it will usually remain in effect until it is either revoked or the principal dies. Some powers which are granted by POAs may carry special requirements or conditions in order to be effective. In many places, for example, a power of attorney that allows the agent to sell real estate for the principal must be recorded in the office of the county clerk or recorder of deeds where the property is located.

Standard forms are available from numerous sources, such as office supply or bookstores, nonprofit organizations, through seminars on estate planning topics, or online. Some states, however, require and provide specific forms for certain types of powers of attorney. While completing a POA is generally a simple task which most people can do themselves, it's still wise to have an attorney look over the finished document to ensure that it meets all of the requirements of the resident state's law.

If the principal moves to another state, the power of attorney should still be honored as long as it met the requirements of the state in which it was executed. However, as in the case of a will, it may be best to execute a new one that complies with the laws of the new resident state. It's also important to review the document periodically to ensure that the principal's needs and objectives remain the same. If a new power of attorney is made, the old one should be revoked in writing and notarized, with a copy sent to everyone who had a copy of the old one or who might otherwise be affected by it.

A durable power of attorney provides, by specific legal language, that the authority granted to the agent will take effect only in the event of the principal's incapacity, and will remain in effect for the duration of the incapacity. The document should also contain a clear statement of the conditions which would constitute "incapacity". Many people prepare durable powers of attorney that give a spouse, partner, adult child, friend, or another the right to make health-care, financial, or other decisions should they become incapacitated and unable to do so for themselves. This is due to the fact that if a person is not pre-designated to handle such responsibilities, the court is required to appoint someone. Choosing one's own agent, therefore, allows these key decisions to be made by someone who is known and trusted, should the need ever arise.

An agent may be any competent adult individual, or it may be a bank or other institution. Many people prepare two or more durable powers of attorney to appoint different agents for different tasks, such as a family member to make health-care decisions and a bank to handle financial issues, for example. Copies of each durable power of attorney should be provided to the agents and any alternate agents that may be designated, as well as to family members, physicians, attorneys, and anyone else who might be affected if the use of the document ever becomes necessary.

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