Attorney-in-Fact: Definition, Types, Powers and Duties

Definition and Role of an Attorney-in-Fact

The role of an attorney-in-fact is to act as a representative of the principal, exercising the powers and duties granted to them in the power of attorney document. The attorney-in-fact must act in the best interests of the principal, making decisions and taking actions that align with the principal’s wishes and intentions.

The attorney-in-fact may be appointed for various reasons, such as when the principal is unable to make decisions due to illness, disability, or absence. The attorney-in-fact may also be appointed to handle specific matters, such as financial or healthcare decisions, on behalf of the principal.

The attorney-in-fact must exercise their powers and fulfill their duties with honesty, integrity, and loyalty towards the principal. They must act in accordance with the instructions and limitations set forth in the power of attorney document. Any actions taken by the attorney-in-fact must be within the scope of their authority and for the benefit of the principal.

Types of Attorney-in-Fact

1. General Attorney-in-Fact

A general attorney-in-fact is granted broad powers to act on behalf of the principal in various legal and financial matters. They have the authority to make decisions and take actions as if they were the principal themselves. This type of attorney-in-fact is commonly appointed when the principal wants someone to handle all their affairs, especially in situations where they may become incapacitated or unable to make decisions.

2. Limited Attorney-in-Fact

A limited attorney-in-fact is appointed for specific purposes and has restricted powers. They can only act within the scope of the authority granted to them by the principal. This type of attorney-in-fact is often appointed for a particular transaction or situation, such as selling a property or managing a specific investment. The limitations on their powers are clearly defined in the power of attorney document.

3. Springing Attorney-in-Fact

A springing attorney-in-fact is only activated under certain circumstances specified by the principal. They do not have immediate powers but rather “spring” into action when a specific event or condition occurs. For example, a springing attorney-in-fact may be appointed to take over the financial affairs of the principal if they are declared mentally incapacitated by a medical professional.

4. Durable Attorney-in-Fact

It is important for individuals to carefully consider their needs and the specific circumstances when choosing the type of attorney-in-fact to appoint. Consulting with a legal professional can provide guidance and ensure that the power of attorney document accurately reflects the individual’s wishes and protects their interests.

Powers of Attorney-in-Fact

An attorney-in-fact is granted certain powers by the principal, which allows them to act on behalf of the principal in legal and financial matters. These powers can vary depending on the specific circumstances and the type of power of attorney granted.

General Powers:

A general power of attorney grants broad powers to the attorney-in-fact, allowing them to handle a wide range of legal and financial matters on behalf of the principal. This may include managing bank accounts, signing contracts, buying or selling property, and making healthcare decisions.

Limited Powers:

A limited power of attorney grants specific powers to the attorney-in-fact for a particular purpose or a limited period of time. For example, the principal may grant the attorney-in-fact the power to sell a specific property or make healthcare decisions only in the event of their incapacity.

Special Powers:

A special power of attorney grants the attorney-in-fact specific powers to act on behalf of the principal in certain situations. This may include the power to make investment decisions, handle tax matters, or manage a business.

Springing Powers:

Durable Powers:

A durable power of attorney remains in effect even if the principal becomes incapacitated. This ensures that the attorney-in-fact can continue to act on behalf of the principal and make decisions for them when they are unable to do so themselves.

Revocable Powers:

A revocable power of attorney can be revoked or terminated by the principal at any time. This gives the principal the ability to change or cancel the powers granted to the attorney-in-fact if their circumstances or wishes change.

Irrevocable Powers:

An irrevocable power of attorney cannot be revoked or terminated by the principal once it is granted. This means that the attorney-in-fact will have the authority to act on behalf of the principal indefinitely, unless the power of attorney specifically states otherwise.

It is important for both the principal and the attorney-in-fact to understand the powers granted in the power of attorney document. The attorney-in-fact should only exercise the powers explicitly stated in the document and act in the best interests of the principal at all times.

Duties of Attorney-in-Fact

1. Fiduciary Duty: One of the primary duties of an attorney-in-fact is to act in the best interests of the principal. This means that they must always act honestly, ethically, and in good faith, putting the principal’s interests before their own. They must avoid any conflicts of interest and make decisions that are in line with the principal’s wishes and instructions.

2. Care and Diligence: An attorney-in-fact has a duty to exercise reasonable care and diligence when performing their duties. This includes taking the time to understand the principal’s needs, preferences, and instructions, and making informed decisions on their behalf. They must also keep accurate records of their actions and transactions, and provide regular updates to the principal as required.

3. Confidentiality: An attorney-in-fact has a duty to maintain the confidentiality of the principal’s personal and financial information. They must not disclose any confidential information to third parties without the principal’s consent, unless required by law. This duty of confidentiality helps to protect the principal’s privacy and ensure that their personal affairs remain private.

4. Accountability: An attorney-in-fact must be accountable for their actions and decisions. They must keep accurate records of all transactions and provide an account of their activities to the principal upon request. This helps to ensure transparency and allows the principal to monitor the attorney-in-fact’s performance and ensure that they are acting in their best interests.

5. Loyalty: An attorney-in-fact owes a duty of loyalty to the principal. This means that they must not engage in any self-dealing or use their position for personal gain. They must act solely in the principal’s interests and avoid any conflicts of interest. This duty of loyalty helps to protect the principal from any potential abuse or exploitation.

Overall, the duties of an attorney-in-fact are designed to ensure that they act in the best interests of the principal and carry out their responsibilities with care, diligence, and integrity. By fulfilling these duties, an attorney-in-fact can help to protect the principal’s rights and interests and ensure that their affairs are properly managed.