Monday, April 25, 2011

NEET Tips

NEET Tips answers questions posed by visitors to the NEET website

What does power of attorney mean?

Power of attorney is a phrase deriving from agency law, which is concerned with a person (the principal) granting another person (the agent) the authority to act on the principal’s behalf. The concept is important particularly in contract law, where the question is often posed: did an agent who signed a contract on behalf of a principal have the authority to bind the principal to the agreement. In estate planning, the term most often arises in two documents: the power of attorney for finances, and the power of attorney for health care, also known in Vermont as an Advance Directive.

In a power of attorney for finances, the principal names an agent to make financial decisions and take related actions on the principal’s behalf. Powers of attorney can be limited to specific actions such as signing closing documents for purchasing a house, or very broad in anticipation that the principal may become incapacitated due to old age or illness.

A power of attorney for health care allows the agent to make medical decisions on behalf of the principal, for instance if the principal is in an accident and can not express their health care wishes.

Both of these documents are important, and should be included in your overall estate plan.

For more information on powers of attorney, see the NEET articles:

Schiavo Predicament Illustrates Need for Advance Directives

Updated Law Expands Advance Directive Options