Types of Powers of Attorney

• Power of attorney is governed by state law, and the laws of the various states allow the principal wide latitude to determine its contents. Nevertheless, a power of attorney is generally thought to fall into four broad categories--limited power of attorney, durable power of attorney, springing power of attorney and general power of attorney. A limited power of attorney is executed for a specific purposes or purposes (selling a home or signing a particular contract, for example). A power of attorney is said to be durable if the agent's authority lasts until the death of the principal. A springing power of attorney takes effect only upon the occurrence of a specific event (the principle's mental incapacity, for example). A general power of attorney allows the agent to perform any legal act that the principal would be able to perform.
  
  

Parties

• State laws require that a power of attorney clearly identify both the principal and the agent. Full names and addresses should always be used. It would also be a good idea to include additional identification data, such as the parties' Social Security numbers.
  
  

Duration

• A power of attorney form should clearly state when the agent's authority begins and ends. It may begin as soon as the document is signed and executed, upon a certain future date, or (in the case of a springing power of attorney) upon the occurrence of a particular event. It may end upon a certain date, upon the occurrence of an event ("when my house is sold", for example) or upon the principal's death.
  
  

Content

• A well drafted power of attorney must state exactly what powers are being granted to the agent. It is important to choose words carefully here. If the language is too narrow, the agent may not be able to demonstrate clear authority to perform all of the acts necessary to achieve the principal's purposes. On the other hand, if the language is too broad, the principal will be taking unnecessary risk by granting the agent more authority than necessary.
  
  

Execution

• Different states have different rules on the valid execution of a power of attorney, but to be on the safe side it would be wise to have two witnesses and a notary public present when the principal signs it. The power of attorney should include a statement in which the witnesses attest that they witnessed the signing. The notary public should check the IDs of the principal, the agent and both witnesses, and notarize all four signatures, making sure that the notary seal is clearly visible on the document.
  
  

Revocation

• Theoretically, a power of attorney can be revoked at any time unless the principal loses the mental competency to understand the nature and significance of the revocation, simply by signing a written notice of intent to revoke and delivering this notice to any interested parties (a bank with whom the agent has been dealing on the principal's behalf, for example). Nevertheless, any transaction undertaken by the agent after the revocation of the power of attorney will be valid against the principal, if the third party that entered the transaction with the agent knew of the power of attorney but did not know of (and had no reason to know of) the revocation.