A power of attorney (POA) is a legal authorization that gives the agent or attorney-in-fact the authority to act on behalf of an individual referred to as the principal. The agent may be given broad or limited authority to make decisions about the principal’s property, finances, investments, or medical care.
POAs can be financial or they can pertain to health care. Both provide the attorney-in-fact with general or limited powers.
What is Power of Attorney?
Power of Attorney (PoA) is more than just a legal document. It’s a lifeline that allows one person to act on behalf of another, especially in their absence. Governed by the Powers of Attorney Act 1882, this legal instrument is often misunderstood but incredibly vital for various transactions, be it property management or medical decisions.
Types of Power of Attorney Forms
- General Power of Attorney: This grants the Agent broad powers to handle a wide range of the Principal’s affairs. The authority under a General POA typically includes buying or selling property, managing business transactions, and handling banking matters. However, this type of POA becomes invalid if the Principal becomes incapacitated.
- Durable Power of Attorney: Similar to a General POA, it allows the Agent to manage the Principal’s affairs, but it remains in effect even if the Principal becomes incapacitated. This feature makes it particularly important for long-term planning.
- Special or Limited Power of Attorney: This grants the Agent authority to conduct specific acts or make decisions in specific situations, such as selling a property, managing certain financial transactions, or handling legal claims. It does not grant broad authority across all areas of the Principal’s life.
- Medical Power of Attorney: A Healthcare Proxy authorizes the Agent to make medical decisions on the Principal’s behalf if they cannot do so themselves. A living often accompanies it will that outlines the Principal’s wishes regarding life-sustaining treatment.
- Springing Power of Attorney: This POA “springs” into effect under specific conditions, typically when the Principal becomes incapacitated. It allows the Principal to retain control over their affairs until a certain event triggers the transfer of authority to the Agent.
Stamp Duty for Power of Attorney
If a General Power of Attorney is conferred to father, mother, brother, sister, wife, husband, son, daughter, grandson, granddaughter or any near relative, without any consideration, then Stamp Duty of Rs. 500/- is only applicable for registration. In case General Power of Attorney is conferred to someone other than a close relative and/or for consideration. Stamp duty is payable as per the property’s market value or the consideration, whichever is higher.
In addition to the stamp duty, a registration fee of Rs.100 is applicable if the Power of Attorney is conferred without consideration in the name of the father, mother, brother, sister, wife, husband, son, daughter, grandson granddaughter or a near relative. In any other case, a registration fee is payable at Rs.10/- per Rs. 1000/- with a minimum of Rs. 100/- and a maximum fee of Rs. 30,000/- on the market value of property or consideration, whichever is higher.
How a Power of Attorney (POA) Works
A power of attorney is a legal document that binds the agent or attorney-in-fact and the principal. It’s used in the event of a principal’s temporary or permanent illness or disability or when they can’t sign necessary documents.1 Both parties must sign the document and a third party is usually required to witness it.
Most POA documents authorize the agent to represent the principal in all property and financial matters as long as the principal’s mental state of mind is good. The agreement automatically ends if the principal becomes incapable of making decisions for themself.
A power of attorney can end for several reasons, such as when the principal revokes the agreement or dies, when a court invalidates it, or when the agent can no longer carry out the responsibilities outlined in the agreement. In the case of a married couple, the authorization may be invalidated if the principal and the agent divorce.
General Power of Attorney vs Special Power of Attorney
General Power of Attorney
A General Power of Attorney provides broad powers to the agent or attorney-in-fact to manage a wide array of the principal’s affairs. This type of POA is comprehensive and allows the agent to make decisions and perform actions as if they were the principals themselves. The authority typically includes handling financial transactions, buying or selling real estate, managing business dealings, and dealing with legal claims and litigation.
Key aspects of a General Power of Attorney include:
- Broad Authority: The agent can perform almost any act the principal could, from managing finances to handling business transactions.
- Convenience: Ideal for individuals who need someone to manage all their affairs due to absence or incapacity.
- Termination: Generally ceases if the principal becomes incapacitated unless it’s specified as “durable.”
Special Power of Attorney
In contrast, a Special (or Limited) Power of Attorney grants the agent authority to act on the principal’s behalf in specific matters or events. This type of POA is used for particular tasks, such as selling a property, managing a specific legal action, or handling financial transactions in a certain account. The document clearly outlines the agent’s powers, limiting their authority to those actions.
Key aspects of a Special Power of Attorney include:
- Limited Scope: The agent’s powers are narrowly defined and restricted to specific tasks.
- Precision: This POA is useful for principals who need an agent to handle specific duties without granting broad access to all affairs.
- Flexibility: Can be tailored to suit the principal’s precise needs for a particular transaction or period.
Key Differences
- Scope of Authority: General POA offers wide-ranging powers, while Special POA is limited to specific tasks.
- Purpose: A General POA is suitable for the comprehensive management of one’s affairs, whereas a Special POA is ideal for particular transactions or events.
- Duration and Revocation: Both types can be revoked by the principal at any time, but the General POA often ceases if the principal becomes incapacitated, unlike the Special POA, which is typically task or time-bound.
Choosing Between General and Special POA
The choice between a General and a Special Power of Attorney depends on the principal’s needs. If comprehensive management of affairs is needed, particularly in anticipation of potential incapacity, a General POA (preferably durable) might be appropriate. A Special POA is more suitable for specific transactions or limited purposes, providing precision and limiting the agent’s authority to the principal’s desired scope.
FAQs
How to select an Agent for a Power of Attorney?
It is preferred to select a trustworthy person and the one who will not cheat you. Further, a person from your family itself is a better option such as spouse ,Children parents etc.
In how much time the Power of Attorney expires?
The Power of Attorney once signed can stay even after the death of the principal and in some cases it may expire after completion of the time mentioned in the Power of Attorney.