When someone is granted power of attorney, that person is authorized to take action on behalf of another individual. What a person is authorized to do can be broad or limited in scope. In most cases, an individual is granted the power to make decisions for another person when some predetermined event occurs in the future.
For instance, the power of attorney may only take effect if an individual becomes incapacitated and unable to make his or her own decisions. This is referred to as a springing power of attorney. The person designated to make such decisions is called an agent. An agent may need to bring the document proving that he or she has power of attorney to invoke his or her power. At any time, the power of attorney may be revoked if the agent is notified in writing.
In some cases, it may be more convenient to give someone the power to control your assets. For instance, an agent can buy or sell property, such as a home or car, on someone else’s behalf without the property owner needing to be present to complete the transaction. Another convenient benefit of designating an agent is that the power of attorney can be made to expire at any time.
Granting a third party power of attorney can be a powerful estate planning tool. It may increase the odds that assets are protected and final wishes are carried out as instructed. Those who want to designate an agent may wish to talk to an estate planning attorney. An attorney may be able to help an individual determine who should be designated as an agent and prepare the proper paperwork to ensure that the arrangement is allowable under state law.
Source: American Bar Association , “Power of Attorney“, December 03, 2014