What Does It Mean to Have an Attorney-in-Fact?
A person who is permitted to act on behalf of another person, known as the “principal,” often to carry out commercial or other formal transactions, is referred to as an attorney-in-fact, which is sometimes referred to as an “agent.” An attorney-in-fact is also called an “agent.” If the person who is being represented is unable to do so on their own due to incapacity, the court may opt to appoint an attorney-in-fact for them instead. Granting that person power of attorney over the principal’s affairs accomplishes this. Different states have different laws and regulations regarding powers of attorney.
An attorney-in-fact does not have to be a licensed legal practitioner. Becoming an attorney-in-fact does not involve any specialized training or education. They might be a member of your family or a close friend. It is also possible to provide power of attorney to more than one person at a time. In a scenario like this one, it ought to be made clear whether a simple majority vote or unanimity is necessary before any action may be taken.
The Attorney-in-Fact and Power of Attorney roles are essential.
A person lawfully designated to act on behalf of another person in a legal or commercial situation is referred to as an attorney-in-fact. This can be for personal or professional reasons. It is expected to refer to the person who appoints the attorney-in-fact as the “principal,” while the attorney-in-fact himself may also be referred to as the “agent.”
The appointment of an attorney-in-fact often takes place through a legal instrument known as a power of attorney (POA). This agreement grants the attorney-in-fact the ability to act on behalf of the principal in several legal and financial concerns, allowing them to make decisions and conduct acts on the principal’s behalf. An attorney-in-fact, for instance, may be granted the authority to sign legal papers on behalf of the principal, oversee the management of a bank account, or sell real estate on the principal’s behalf.
The attorney-in-fact doesn’t need to have a legal background. Still, they are obligated to work in the best interests of the principal and adhere to any instructions or rules that are outlined in the power of attorney document. Additionally, the attorney-in-fact is obligated to maintain confidentiality regarding the principal’s business and to keep detailed records of any activities made on the principal’s behalf.
It is essential to remember that an attorney-in-fact is distinct from a lawyer or an attorney. A lawyer is a trained professional who has been granted permission to engage in the practice of law. In contrast, an attorney-in-fact is just a person who has been delegated the responsibility of representing the interests of another individual.
Different kinds of attorney-client power
There are essentially two different kinds of powers of attorney (POA) that can be given to attorneys-in-fact.
- The general power of attorney not only gives the attorney-in-fact the authority to sign documents and do business on behalf of the principal, but it also gives them the authority to make decisions on the principal’s behalf, including those about their finances.
- In the case of a limited power of attorney assignment, often called a “special power of attorney,” the attorney-in-fact may be permitted to engage in particular transactions and make specific decisions but not others. They are restricted to the themes outlined in the document that assigns them.
The Authority and Responsibilities of a Power of Attorney
Suppose the attorney-in-fact is given a general power of attorney. In that case, they have the authority to act on the principal’s behalf in any way that is consistent with the reasonable expectations of the principal. This indicates that an attorney-in-fact would have the authority to act on behalf of the principal in opening and closing bank accounts, making withdrawals of funds, trading stocks, paying bills, and cashing checks.
If the power of attorney is restricted, the attorney-in-fact will have substantial capabilities in one or more areas, but they will not have ability in other areas. For instance, the attorney-in-fact might be given the authority to carry out transactions at the principal’s direction but not the authority to make decisions about the principal’s company or finances. It is also possible to have a more restricted scope, such as just allowing the ability to sign documents about the impending sale of a particular property.
Which is better: an attorney-in-fact or an attorney-at-law?
As was said before, an attorney-in-fact does not need to be a licensed legal professional. Another way to refer to a “lawyer” is as an “attorney-at-law.” If you have completed the bar examination for your state and are therefore authorized to practice law in that state, you are considered an attorney-at-law. You can represent clients in legal proceedings as either a prosecutor or a defense attorney on their behalf.
Their purposes are also distinct from one another. An attorney-in-fact is obligated to make choices on behalf of their principal, in contrast to an attorney-at-law, who is not permitted to do so on behalf of their client. Instead, they provide their client with legal counsel and may even act as the client’s representative in court.
Power of Attorney Documents That Are Lasting
When a person dies, becomes mentally unable, or intentionally decides to withdraw the power of attorney by way of a notification filed in court, the power of attorney is said to have been terminated. It can end if it has a predetermined date or its goal has been fulfilled. However, suppose it has been specified as a “durable” power of attorney. In that case, the attorney-in-fact keeps the power of attorney even if the principal loses their ability to decide for themselves. In this kind of scenario, the attorney-in-fact has the authority to continue making choices on the principal’s behalf, including those concerning their finances and their medical care.
It is possible to award a durable power of attorney in advance with the stipulation that it will not go into effect until a specific event occurs, such as when the principal cannot make decisions for themselves. This type of power of attorney is frequently called a “springing” power of attorney. In this situation, it is a good idea to choose one or more successors, as the original designee may be unable to fulfill their role or may be reluctant to take on the duty of being an attorney-in-fact owing to changes in their circumstances. 8
Why do you require the services of an attorney?
Many different circumstances may call for the appointment of an attorney-in-fact. It may be done for convenience, like when purchasing or selling an asset, when it would be inconvenient for you to be present to finalize the transaction physically. It is also for situations in which you are unable to act for yourself, whether as a result of a mental or physical disability or something less severe, such as travel, illness, or an accident.
Is legal training required to work as an attorney-in-fact?
No. You are free to choose whomever you like as your attorney-in-fact if you so desire. Most of the time, they are members of the same family or close acquaintances. In light of the preceding, nothing stops you from appointing a legal professional, commonly known as an “attorney-at-law,” to serve as your attorney-in-fact.
What are the key distinguishing characteristics between an attorney and an attorney-in-fact?
It is essential to remember that an attorney-in-fact is distinct from a lawyer or an attorney. A lawyer is a trained professional who has been granted permission to engage in the practice of law. In contrast, an attorney-in-fact is just a person who has been delegated the responsibility of representing the interests of another individual.
Are We Talking About the Same Thing When We Talk About Power of Attorney and Attorney-in-Fact?
Never in a million years. An attorney-in-fact is a person you choose to act on your behalf after being granted power of attorney by you. The written instrument that gives control to the attorney must typically be presented if the attorney-in-fact is asked to provide evidence of their authority when making decisions on the principal’s behalf.
What Obligations Do You Have to Fulfill When Serving as an Attorney-in-Fact?
You are legally accountable, as an attorney-in-fact, for carrying out the obligations and responsibilities delegated to you by the principal. This indicates that you have a legal duty to behave in a manner that is beneficial to the principal as well as to adhere to the directions and rules that are outlined in the power of attorney document. Suppose you fail to carry out the responsibilities of your role as attorney-in-fact.
In that case, you run the risk of being held responsible for any damages or losses that are precipitated by your acts or inactions. For instance, if you choose the principal’s finances while acting in that capacity and that decision leads to a monetary loss, you can be held financially accountable for that loss.
Additionally, you risk being accountable for any actions taken on the principal’s behalf that exceed the scope of the power of attorney document. Suppose a power of attorney indicates that you are not permitted to sell the principal’s property, but you sell it anyway. In that case, you might be held accountable for any damages the principal incurs due to the sale. As another example, if the power of attorney expressly states that you are not authorized to sell the principal’s property, but you sell it anyway, you could be held liable. It is crucial to thoroughly analyze the power of attorney and ensure that you completely understand your obligations as an attorney-in-fact to prevent the possibility of being held liable for something. If you have any questions or concerns concerning the responsibilities that come with acting as an attorney-in-fact, you should seek the advice of an attorney.
The Crux of the Matter
An attorney-in-fact is a person who has been given the ability to make decisions on behalf of another individual, referred to as the “principal.” This authority is bestowed upon the attorney-in-fact using a written instrument that confers power of attorney upon that individual. A power of attorney can either be broad in scope or more narrowly focused on a particular set of transactions and concerns. In most cases, it will only become invalid if the principal passes away, becomes mentally unable, or deliberately revokes it through a notification submitted in court. If, on the other hand, it is a durable power of attorney, the attorney-in-fact will remain in their role even if the principal loses their ability to make decisions.
It is essential to give careful consideration before deciding to choose an attorney-in-fact, and the individual or individuals you choose (you are allowed to nominate more than one) should be somebody in whom you have complete confidence. The most common candidates are members of the family and close acquaintances. Be careful to clarify whether a majority vote may make decisions or whether they need to be unanimous if you designate more than one person to the committee.
Conclusion
- A person assigned to act on behalf of another person in legal, financial, or personal matters is known as an attorney-in-fact. This can be for a variety of reasons.
- To appoint someone as one’s attorney-in-fact, a power of attorney must first be granted, often by the individual who will be represented.
- Someone doesn’t need to be an attorney-at-law to serve as an attorney-in-fact, another term for “lawyer.” The former provides advice and representation to a client but is not engaged in the decision-making process, in contrast to the latter, which makes choices on behalf of a principal.
- It is expected to refer to the person who appoints the attorney-in-fact as the “principal,” while the attorney-in-fact himself may also be referred to as the “agent.”
- If another person has become mentally or physically incapable of caring for themselves, the courts may be able to appoint a power of attorney for them.
