What is an 'Attorney In Fact'
An attorney in fact is a person who is authorized to perform business-related transactions on behalf of someone else (the principal). In order to become someone's attorney in fact, a person must have the principal sign a power of attorney document. This document designates the person as an agent, allowing him to perform actions in the principal's stead.
BREAKING DOWN 'Attorney In Fact'An attorney in fact takes two forms. The first type is a "general power of attorney," which allows the attorney in fact to conduct all business and sign any document on behalf of the principal. The second type is a "special power of attorney," which allows the person to sign documents and conduct business on the principal's behalf only in specific situations. The power of attorney document, in the case of a special power of attorney, outlines the matters in which the attorney can act instead of the principal.
It's important to note that an attorney in fact does not need to be a practicing attorney, also known as an attorney at law. As long as the power of attorney document is signed by the principal, it can appoint anyone to be the attorney in fact, even family members.
The Powers and Duties of an Attorney in Fact
An attorney in fact, if designated as a general power of attorney, is allowed to conduct any investment or spending actions that the principal would reasonably take. This means that an attorney in fact, in this case, would be able to open and close bank accounts, withdraw funds, trade stocks, pay bills or cash checks, all on the behalf of the principal.
An example of this would be when an elderly person grants general power of attorney to his child. This would allow the child to help with bills and other financial matters that may be outside the scope of ability of the elderly person. This is especially beneficial if the older person is immobile or otherwise bedridden and can't travel to a bank for their financial matters.
If a principal believes that a general power of attorney gives too much power to someone else, he can designate an attorney in fact as a special power of attorney. Using the same example as above, if an elderly person is normally mobile but recently underwent surgery, he can grant special power of attorney to his child to pay his bills while he recovers. However, all attorneys in fact are required to keep a fiduciary duty, meaning that the best interest of the principal must be upheld.