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The Essentials Of Power Of Attorney

Aug 25, 2024 | Uncategorised, Life

You may have heard the term, “Power of Attorney,” and you might have an idea of what this is, but you may not realise just how significant this one little document can be. Essentially, power of attorney (POA) is a legal document that allows one person to act on behalf of another in legal or financial matters. This arrangement is crucial for individuals who have become incapacitated or are unable to manage their affairs due to health issues or other circumstances.  

Given the life changing impact that the POA can have on both the person endowed with this level of responsibility and the person reliant on them, it’s vital that you take the time to understand specifics and nuances of POA.  

What Is Power Of Attorney? 

As mentioned, a POA is a legal document. When you, often referred to as the ‘agent,’ are granted this decision-making authority, you have the legal ability to act on behalf of another person in certain matters. A POA can take various forms, including general power of attorney, special power of attorney, springing power of attorney, and durable power of attorney.  

Here’s a closer look at how these differ: 

  • General Power of Attorney: You would be granted broad powers to act on behalf of another person in a variety of matters, with very few limits (if any).  
  • Special Power of Attorney: The agent is granted limited authority and can only make specific decisions. A good example is when you are only granted the authority to sell your parent’s property on their behalf and can’t make any other decisions. 
  • Durable Power of Attorney: This kind of POA enables you to act on behalf of another person if they become mentally or physically unable to do so for themselves.
  • Springing Power of Attorney: You, as the agent, are only be granted authority in the event of a pre-selected event, like an illness. 

Why A Power Of Attorney Matters 

Clearly this is an important decision, and consequently you should be extremely careful about whom you appoint to act on your behalf. You may think that the right person is the one closest to you. In actual fact, you should choose someone who will best represent your wishes and won’t abuse the powers granted to them. 

But why is this so necessary? Well, setting up a POA ensures that your financial and legal interests are protected when you cannot act for yourself. Not only does this enable you to make absolutely sure that your wishes are followed when you’re unable to do anything yourself, but it can also prevent disputes from arising. Very often legal disputes can be financially and emotionally draining, and in some cases, it can drain your own Estate leaving very little left to ensure that your future is cared for in the way that you would want.  

Additionally, having a POA is what you can do to make sure that only trusted individuals are allowed to manage your affairs. This is particularly helpful for elderly individuals or those with chronic illnesses. Lastly, we would argue that having a valid POA can help avoid the need for court-appointed guardianship, which can be a lengthy and costly process. 

How To Set Up A Power Of Attorney 

We briefly mentioned having a ‘valid’ POA. You should know that a Power Of Attorney is a very intentional legal document which involves several steps, and if this document is not set up properly, your POA may not be viewed as valid. In short, your wishes and best interests may not be respected. 

Step 1: Choose Your Agent Wisely  

The ‘agent’ is the person to whom you delegate your POA and this person should be someone you trust completely. The best way to make your choice is to first establish the purpose of your POA. Knowing and defining the precise ‘powers’ that your agent will have in order to carry out legal acts on your behalf will help you choose the right person. 

Step 2: Draft the Document 

A POA is an all-powerful tool and it can be extremely dangerous in the wrong hands. We really do suggest that you have a legal professional draft your POA and make sure that it meets all legal requirements. An attorney will also make sure that you are safeguarded against any potential abuse of power. 

Step 3: Sign With Witnesses  

The document must be signed in front of witnesses to be legally binding. 

Bonus Step: Register Your Power Of Attorney 

This is not always a necessary step, however registering your POA with the relevant authorities can provide you with additional security and recognition. 

Feel informed?  

Our goal is to empower South Africans to make informed decisions about their legal rights and responsibilities. Understanding Power of Attorney is just one part of planning for the future. It’s equally important to have a valid Will in place to ensure your wishes are honoured after your passing. That’s precisely why the AA Inform offers the opportunity to get a Will drawn up for free. Don’t leave your loved ones with uncertainty.

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