What Is The Meaning Of Attorney In Fact

An attorney in fact is a person you trust and legally authorize to act on your behalf in specific or all matters. This authorization is granted through a legal document called a power of attorney. Understanding the role, responsibilities, and limitations of an attorney in fact is crucial for anyone considering creating a power of attorney or agreeing to serve in this important position.

What is an Attorney in Fact?

An attorney in fact is not necessarily a lawyer, despite the term including "attorney." The "attorney" in this context refers to someone who acts as an agent or representative for another person. In essence, an attorney in fact is your agent, empowered to make decisions and take actions on your behalf according to the terms outlined in your power of attorney document.

The powers granted to an attorney in fact can be broad or very specific. For example, you might grant someone the power to manage your finances, handle real estate transactions, make healthcare decisions, or simply sign documents on your behalf. The scope of their authority is entirely determined by the language in the power of attorney document.

Power of Attorney Explained

A power of attorney (POA) is the cornerstone of the attorney in fact's authority. It's a legal document that gives one person the power to act on behalf of another. The person granting the power is called the principal, while the person receiving the power is the attorney in fact (also sometimes referred to as an agent or proxy).

There are several types of POAs, each serving different purposes:

General Power of Attorney: This grants broad authority to the attorney in fact to act on the principal's behalf in nearly all matters. It's often used when someone needs assistance managing their affairs due to travel or other reasons. This type of POA usually terminates automatically if the principal becomes incapacitated.
Special or Limited Power of Attorney: This grants the attorney in fact authority to act only in specific situations or for specific transactions. For example, you might create a limited POA to allow someone to sell a particular piece of real estate on your behalf.
Durable Power of Attorney: This is the most common type of POA used for long-term planning, especially in anticipation of potential incapacity. A durable POA remains in effect even if the principal becomes mentally or physically incapacitated. This is crucial for ensuring someone you trust can manage your affairs if you are unable to do so yourself.
Springing Power of Attorney: This type of POA only becomes effective upon the occurrence of a specific event, such as a doctor's declaration that the principal is incapacitated. While it offers some protection against premature intervention, it can sometimes be difficult to implement because it requires proving that the triggering event has occurred.

Responsibilities of an Attorney in Fact

Serving as an attorney in fact is a significant responsibility that requires trustworthiness, diligence, and integrity. Here are some key duties and obligations:

Act in the Principal's Best Interest: The paramount duty of an attorney in fact is to act solely in the best interest of the principal. This means making decisions that the principal would likely make if they were capable.
Maintain Accurate Records: The attorney in fact must keep detailed and accurate records of all transactions made on behalf of the principal. This includes documenting income, expenses, and any other financial activities. These records may need to be provided to the principal, their family, or a court if requested.
Avoid Conflicts of Interest: The attorney in fact must avoid any situations where their personal interests conflict with the interests of the principal. For example, they should not use the principal's funds for their own benefit or engage in transactions that benefit themselves at the principal's expense.
Act Within the Scope of Authority: The attorney in fact can only act within the specific powers granted to them in the power of attorney document. They cannot exceed their authority or take actions that are not explicitly authorized.
Respect the Principal's Wishes: Even if the principal is incapacitated, the attorney in fact should, to the extent possible, try to respect their known wishes and values. This might involve consulting with family members or reviewing prior statements made by the principal.
Maintain Confidentiality: The attorney in fact has a duty to maintain the confidentiality of the principal's personal and financial information.
Act Prudently: The attorney in fact must act with reasonable care, skill, and diligence when managing the principal's affairs. This includes making informed decisions and seeking professional advice when necessary.

How to Choose an Attorney in Fact

Selecting the right person to serve as your attorney in fact is a critical decision. Here are some factors to consider:

Trustworthiness: This is the most important quality. Choose someone you trust implicitly and who has a proven track record of honesty and integrity.
Competence: The person should be capable of managing the tasks you are assigning to them. If you need someone to handle complex financial matters, choose someone with financial experience or who is willing to seek professional advice.
Availability: The attorney in fact should be readily available to handle your affairs when needed. Consider their location, work schedule, and other commitments.
Willingness: Make sure the person is willing and able to take on the responsibilities of an attorney in fact. It's a significant commitment, and they should understand the duties involved.
Communication Skills: The attorney in fact should be able to communicate effectively with you, your family, and any professionals they may need to work with, such as doctors, lawyers, or financial advisors.
Age and Health: Consider the person's age and health. You want someone who is likely to be able to serve in the role for as long as needed.
Consider a Successor: It's always a good idea to name a successor attorney in fact in case your primary choice is unable or unwilling to serve.

Steps to Create a Power of Attorney

Creating a power of attorney involves several important steps:

Determine Your Needs: Decide what powers you want to grant to your attorney in fact and what type of POA is best suited for your situation (general, special, durable, or springing).
Choose Your Attorney in Fact: Carefully consider who you want to appoint as your attorney in fact, taking into account the factors mentioned above.
Consult with an Attorney: It's highly recommended to consult with an attorney who specializes in estate planning. They can help you draft a power of attorney document that accurately reflects your wishes and complies with the laws of your state.
Draft the Power of Attorney Document: The POA document should clearly and specifically outline the powers you are granting to your attorney in fact, any limitations on their authority, and when the POA becomes effective and terminates.
Sign and Notarize the Document: In most states, a power of attorney must be signed by the principal and notarized to be valid. Some states may also require witnesses.
Provide Copies to Relevant Parties: Give copies of the POA to your attorney in fact, your financial institutions, your healthcare providers, and any other parties who may need to rely on it.
Review and Update Regularly: Review your power of attorney periodically, especially if there are changes in your circumstances or the laws in your state. You may need to update it to ensure it still meets your needs.

Termination of a Power of Attorney

A power of attorney can be terminated in several ways:

Revocation by the Principal: The principal can revoke the power of attorney at any time, as long as they are mentally competent. The revocation should be in writing and provided to the attorney in fact and any other relevant parties.
Death of the Principal: A power of attorney automatically terminates upon the death of the principal.
Incapacity of the Principal (if not a durable POA): If the power of attorney is not a durable POA, it terminates automatically if the principal becomes incapacitated.
Expiration Date: If the power of attorney includes an expiration date, it terminates on that date.
Completion of Purpose (for a specific POA): If the power of attorney was created for a specific purpose, it terminates when that purpose is accomplished.
Divorce (in some cases): In some states, a power of attorney granted to a spouse automatically terminates upon divorce.

Attorney in Fact vs. Legal Guardian

It's important to distinguish between an attorney in fact and a legal guardian. While both roles involve making decisions for another person, they are established through different legal processes and have different scopes of authority.

Attorney in Fact: Appointed by the principal through a power of attorney document. The attorney in fact's authority is defined by the terms of the POA and can be revoked by the principal as long as they are competent.
Legal Guardian: Appointed by a court to make decisions for someone who is deemed legally incapacitated. Guardianship typically involves more comprehensive oversight of the person's life, including healthcare, living arrangements, and financial matters. Guardianship can only be established through a court proceeding and is subject to ongoing court supervision.

Common Misconceptions about Attorneys in Fact

"An attorney in fact is always a lawyer." This is incorrect. An attorney in fact is simply someone authorized to act on behalf of another person, and they do not need to be a lawyer.
"A power of attorney gives the attorney in fact complete control over the principal's life." This is also incorrect. The attorney in fact's authority is limited to the specific powers granted in the power of attorney document.
"A power of attorney is only for elderly or infirm people." While POAs are often used for elder care planning, they can be useful for anyone who wants to authorize someone to act on their behalf, regardless of age or health.
"A power of attorney is a one-time document that never needs to be reviewed." It's important to review your power of attorney periodically to ensure it still meets your needs and complies with current laws.

The Importance of Legal Counsel

While it's possible to create a power of attorney without the assistance of an attorney, it's highly recommended to seek legal counsel. An experienced attorney can help you:

Understand the legal requirements for creating a valid power of attorney in your state.
Draft a POA document that accurately reflects your wishes and protects your interests.
Advise you on the best type of POA for your specific situation.
Help you avoid common pitfalls and potential legal issues.

Conclusion

Understanding the meaning of "attorney in fact" is essential for anyone considering creating a power of attorney or agreeing to serve in this role. An attorney in fact is a trusted agent empowered to act on your behalf, making important decisions about your finances, healthcare, or other matters. By carefully choosing your attorney in fact, clearly defining their powers, and seeking legal guidance, you can ensure that your affairs are managed according to your wishes, even if you are unable to do so yourself.