At various times, we might find ourselves needing someone else to step into our shoes to help manage our affairs.

This could be due to illness, a prolonged absence, or just preparing for potential future scenarios.

For such times, a "power of attorney" (PoA) contract is an incredibly handy tool. This legal document assigns the authority to one person (the agent) to make decisions on behalf of another person (the principal).

In this detailed guide, we'll cover everything you need to know about a power of attorney contract, including its purpose and its contents. We'll even share a free power of attorney template to help you get started.

What is a Power of Attorney contract?

A power of attorney (POA) is a legally binding agreement that grants one person (the agent or attorney-in-fact) the authority to make decisions on behalf of another person (the principal).

The scope of these decisions can range from financial matters to health-related decisions, depending on the terms of the contract.

Durable vs non-durable POA: what's the difference?

The power of attorney contract can be 'durable' or 'non-durable'.

A durable power of attorney remains in effect even if the principal becomes mentally incapacitated, while a non-durable power of attorney ends if the principal becomes mentally incapacitated.

When should you use a Power of Attorney agreement?

A power of attorney contract template can be useful in several situations. These may include:

• Planning for the future: You might be planning ahead for a time when you may not be able to make decisions for yourself due to illness or age.
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• Medical Reasons: If you're undergoing a major surgery and expect to be incapacitated for a period of time, a PoA can allow someone to manage your affairs during your recovery.
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• Extended Absence: If you're planning to be away for an extended period, perhaps due to work or travel, a PoA can ensure that your affairs are taken care of in your absence.

What should a Power of Attorney contract cover?

A power of attorney contract should include the following elements:

• Identification of Parties: The contract needs to clearly list the names, addresses, and contact details of the principal and the agent.
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• Scope of Authority: This section outlines what the agent is allowed to do on behalf of the principal. It could be broad or limited, depending on the principal's needs and preferences.
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• Duration: The contract should clearly mention when the agent's powers begin and when they end. This could be a specific time period, upon a certain event, or it may be indefinite.
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• Revocation Details: Instructions on how the principal can revoke (cancel) the power of attorney should be clearly outlined.
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• Signatures: The principal must sign the document. In many places, a PoA should also be witnessed or notarized to be legally effective.

Why should you use a Power of Attorney template?

A power of attorney contract template can simplify the process of drafting this important legal document. A well-designed template can:

• Ensure Legal Compliance: Templates are often designed by legal experts and conform to legal standards, ensuring that your document is legally compliant.
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• Provide a Clear Structure: A template gives you a clear structure to follow, making sure you include all the necessary sections and information.
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• Save Time: Rather than starting from scratch, a template allows you to save time by providing a ready-made format that you just need to customize with your specific details.

This makes it even easier to make these difficult decisions, as a power of attorney template will reduce the administrative burden placed on the contract owner, allowing them to focus on their other responsibilities.

Who Creates a Power of Attorney Agreement?

The person who creates a power of attorney agreement is typically the individual who will serve as the "principal" in the agreement. This person is often seeking to appoint an "agent" (also known as an "attorney-in-fact") who will act on their behalf under certain conditions.

Here's a more detailed look at the key roles involved:

1. Principal

‍The principal is the person who initiates the creation of the power of attorney. This person decides they need an agent to act on their behalf in specific or broad circumstances.

The principal is responsible for identifying a reliable and trustworthy person to act as their agent, defining the scope of the agent's authority, and initiating the process to legally document this arrangement.

2. Agent

‍The agent (or "attorney-in-fact") is the person designated by the principal to act on their behalf.

Although they do not create the agreement, the agent plays a critical role and must consent to their appointment. They should understand their obligations and the scope of their authority as outlined in the power of attorney agreement.

3. Legal Counsel

‍Although not required, it is highly recommended to involve a legal professional in the process of creating a power of attorney.

This can ensure that the agreement is legally valid, comprehensive, and accurately reflects the principal's intentions. An attorney or lawyer can draft the contract or review a completed template to verify that it serves the principal's best interests.

In summary, while the principal is the driving force behind the creation of a power of attorney agreement, the process often involves close cooperation with the agent and potentially a legal professional. These roles work together to develop an agreement that respects the principal's wishes and protects their interests.

Now let's explore what this creation process involves in more detail.

How to create a Power of Attorney contract

Creating and managing a power of attorney contract involves careful thought and continuous oversight. Here's a detailed look at the process:

• Identify the Need: The first step is to recognize the need for a power of attorney. This could be due to the anticipation of medical procedures, travel, or simply planning for unexpected circumstances.
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• Choose an Agent: The principal should select someone trustworthy who understands their wishes and interests. This person should be capable of making responsible decisions on the principal's behalf.
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• Define the Scope: Clearly outline what the agent can and can't do. This can range from a specific task (like selling a property) to a wide range of tasks (like managing all financial affairs).
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• Use a Template: A power of attorney contract template can be a helpful tool to start with. It provides a structured format that covers all legal requirements.
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• Seek Legal Advice: To ensure that the power of attorney contract is legally valid and accurately represents the principal's intent, it's worth consulting with a legal professional.
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• Sign and Notarize: Once the document is complete and reviewed by a lawyer, it must be signed by the principal and often needs to be notarized or witnessed to be legally effective.

How to manage a Power of Attorney contract post-signature

What happens to a Power of Attorney agreement once the document has been signed? Well, there are a few important stages to complete post-signature. Let's run through them now.

• Maintain Open Communication: The agent and the principal should keep lines of communication open. Regular updates and consultations can help ensure that the agent's actions align with the principal's wishes and needs.
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• Record Keeping: The agent should keep detailed and accurate records of all transactions or actions taken under the power of attorney. This level of transparency helps in case of any disputes or concerns.
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• Periodic Reviews: The principal, or a third party designated by the principal, should review the power of attorney agreement periodically to ensure it still serves the principal's interests and to make amendments if necessary.
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• Monitor the Agent's Actions: Monitoring helps ensure the agent is fulfilling their duties properly. This could involve checking financial transactions or any other actions the agent has taken on the principal's behalf.
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• Respect Privacy: The agent should handle the principal's information responsibly and maintain their confidentiality.
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• Consult with Professionals: When the agent needs to make significant decisions, they should consult with professionals in that field, such as lawyers for legal decisions, financial advisors for financial decisions, and doctors for health-related decisions.

In essence, creating a power of attorney contract requires careful consideration, and managing it involves vigilance and ongoing communication.

The process aims to protect the principal's interests, so any actions that deviate from this intent should be addressed promptly. If concerns arise, consult a legal professional immediately.

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