Asian Journal- The Filipino-American Community Newspaper

THE power of attorney is perhaps the most important tool a person needs to protect financial interests if there comes a time when an individual is not able to act. Signing a power of attorney is absolutely critical to ensure a person’s future independence in the event of illness or incapacity. Without it, one risks having his or her affairs managed by a court-appointed guardian, possibly a stranger, under court supervision and often without the ability to have any input. In other words, the person literally loses financial control. The power of attorney is the cornerstone of a financial management plan. It ensures that a person’s wishes will be respected if there comes a time when he or she is unable to act. It is a written document whereby someone is appointed to manage that person’s financial affairs in the event of illness or incapacity.

The person executing the power of attorney (called the "principal") appoints another (called the "attorney-in-fact," "proxy," or "agent") who, through this legal document, is empowered to manage the principal’s financial affairs. The attorney-in-fact can be a spouse, a child or someone else. That designated person can pay bills, make banking and brokerage account transactions, and even bring a lawsuit. Generally the power of attorney spells out in detail the specific powers that the attorney-in-fact will have.

Powers of attorney are governed by state law, which determines the process required for executing a valid power of attorney, the powers that may be granted to the attorney-in-fact, and other provisions concerning validity and duration of a power of attorney. When you create and sign a power of attorney, you give another person legal authority to act on your behalf. This person is called your "attorney-in-fact" or, sometimes, your "agent." The word "attorney" here means anyone authorized to act on another’s behalf; it’s most definitely not restricted to lawyers.