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General Guide to Power of Attorney
A person can ensure that their legal and other affairs are protected in their absence by entrusting a trusted person through a Power of Attorney document to act on his or her behalf during a contingency.
To create a Power of Attorney document it is essential for a person to understand the legal framework and other nuances of law related to the execution of the document in India to ensure that all their interests are adequately safeguarded.
What is a Power of Attorney (POA)?
A power of attorney is a legal document prepared by a person known as the “Principal” authorising and granting power to his/her trusted friend or relative referred to as the “Attorney or Agent or holder” to act on behalf of or manage legal, financial, or other administrative matters such as property transactions, mortgages, lease, rent collection, management and settling disputes, commercial transactions and matters, judicial proceedings, tax payments, etc. in his/her absence. The document demarcates the powers that are assigned to the POA holder.
Types of POA
Based on nature and purpose, a POA can be classified into two categories: General power of Attorney (GPA) and Specific/Special Power of Attorney (SPA).
- General Power of Attorney (GPA): This POA provides a broad authority to the chosen POA holder to manage the affairs of the Principal in their absence.
- Specific/Special Power of Attorney (SPA): When the Principal requires the assistance of the POA holder to perform a single or particular task, such as a real estate transaction or tax payments a Special Power of Attorney is prepared, granting limited authority pertaining to a specific purpose to the POA holder.
Duration / Validity of POA
The validity of a POA depends on the type of POA and the purpose for which it is granted. A GPA is valid until it is revoked by the Principal, or on the expiry of the time period as specified by the Principal in the POA, or till the death of the Principal or when the Principal becomes mentally or physically unfit. A General POA is considered a durable POA when compared with a SPA.
In the case of a SPA, the validity of the SPA expires on the completion of the object or the purpose for which the POA is granted.
Whether it is a POA or SPA, the Principal can revoke the power of attorney at any time. The revocation so done should be made by the principal capable mentally and physically to revoke the POA. The revocation should be made in writing and communicated to the POA holder.
Benefits of having a POA
A POA provides several advantages to the Principal such as:
- Ensures smooth continuity of affairs
- Convenience to the Principal
- Provides flexibility to delegate responsibilities
- Financial management by payment of bills, management of investments, etc.
- Helps in smooth management of the assets and affairs.
Key points to note while drafting a POA
Though it is not necessary to consult a legal professional for drafting a POA, it is beneficial if the POA is drafted by an expert, if the subject matter is complex, or to adhere to state laws for smooth execution. While drafting a POA, the following elements are to be included:
- Name and personal details of the Principal;
- Name and personal details of the Agent;
- Reason for granting the POA;
- Clear description of the powers entrusted to the Agent;
- Specific conditions or restrictions for the Agent;
- Effective and termination dates, if limited by time;
- Signatures of both the Principal and Agent;
- Signatures of witnesses and notarization, if necessary;
- In the case of general power of attorney, briefly mention the areas of power granted and the acts and powers of the agent. {egs; In case the Principal grants a GPA, the Principal can grant the power to rent or buy any property but may not grant the power to sell the property;
- In case of special power of attorney, specific or the particular tasks required to be done by the agent should be mentioned clearly.
Revocation of a POA
The Principal can revoke the POA at any time as he or she pleases, provided he or she is of sound mind. The revocation should be done in writing, signed before a notary, and given to the POA holder.
