Attorney-in-fact and Power of Attorney are two very important legal concepts – one is wielded while the other one wields it. Let’s see and find out which is which.
An attorney-in-fact is an individual who is appointed to make legal decisions on someone else’s behalf (the principal). The appointed individual is granted a power of attorney, duly signed by the principal, and becomes an “agent” authorized to perform legal, business, medical, and even personal actions according to the interests of the principal. An individual does not need to be a practicing attorney to qualify as an agent for the principal.
An attorney-in-fact is entrusted with managing the finances or other assets of the principal. He is authorized to open or cancel accounts, withdraw funds, cash checks, pay bills – all financial actions that the principal would normally make.
A common scenario involves an elderly person who appoints their child as the attorney-in-fact. The child will take on financial matters that the elderly parent would no longer be capable of doing, such as going to the bank to make transactions. An attorney-in-fact can also be appointed temporary power in special situations (i.e., recovering from surgery). Attorneys-in-fact are mandated by law to act only in the best interest of the principal.
A power of attorney, or POA (also called a letter of attorney) is given to an attorney-in-fact so they can act on behalf of the principal. These would include business, private, and other legal matters the principal won’t be able to attend to in certain situations. A power of attorney is usually in written form and takes effect only when duly signed by the principal.
The principal, also called the grantor, can only create a power of attorney if they are capable of making a legal decision. If in any case the grantor becomes incapable of granting authorization, even if the power of authority had already been created, the power will probably become null and void.
There are different types of power of attorney. The first one is a special POA, and it is limited to a specific event or time frame. A general POA authorizes an attorney-in-fact to make personal and business decisions for the principal. A power of attorney ends when the principal dies or becomes mentally incapacitated. A durable power of attorney is created to ensure the POA is in still in effect even if the principal is no longer mentally capable. A health care proxy is executed to make sure medical decisions are carried out according to the patient’s wishes after a mental incapacity.
Attorney-in-fact vs Power of Attorney
So, what is the difference between attorney-in-fact and power of attorney?
A person legally entrusted with carrying out private, business, financial, and even medical matters in behalf of a principal is called an attorney-in-fact. It is a designation for a role that has limitations. The document that gives authority to the attorney-in-fact to make these decisions and actions for the principal is called the power of attorney. It is a legal document that loses validity upon the passing of the principal.
|Attorney-in-fact||Power of attorney|
|An individual chosen to act and make decisions on behalf of another person||Gives authorization to the attorney-in-fact to act on behalf of another|
|A designation that has limitations depending the type of POA awarded||A legal document that can be created if a person is still capable of making legal decisions|