What Does Power of Attorney Mean?
Power of attorney is a legal document that designates an individual to act on the behalf of another. It gives the appointee, known as an agent or attorney-in-fact, broad or limited legal authority to handle the affairs of the principal, or person who signs the document. Individuals typically give another power of attorney in case they become seriously ill or disabled or cannot be present to sign legal documents as needed. In terms of insurance, the insurer may want power of attorney from the insured to complete the necessary transactions in the event of a loss.
Insuranceopedia Explains Power of Attorney
A power of attorney details the exact transactions the agent may conduct on the principal's behalf. It may be as limited or as broad as desired, and it can be written to come into effect either immediately or once a specified event takes place. Individuals typically give another power of attorney for a multitude of reasons. They may confer it to an agent to handle financial or business matters on their behalf or sign any necessary legal documents when they cannot be present. In other cases, it becomes active when the principal becomes seriously ill, disabled, or mentally incapacitated. This way, the agent can make medical decisions for the principal, look after their assets, or both. As this document grants another legal authority over the principal's affairs or decisions, it is important to choose a trusted family member, friend, or honest professional.