What is a 'Power Of Attorney'
A power of attorney is a legal document giving one person (called an "agent" or "attorney-in-fact") the power to act for another person (the principal). The agent can have broad legal authority or limited authority to make legal decisions about the principal's property and finance. The power of attorney is frequently used in the event of a principal's illness or disability, or when the principal can't be present to sign necessary legal documents for financial transactions.
BREAKING DOWN 'Power Of Attorney'
There are many good reasons to make a power of attorney, as it ensures that someone will look after your financial affairs if you become incapacitated. You should choose a trusted family member, a proven friend or a reputable and honest professional. Remember, however, that signing a power of attorney that grants broad authority to an agent is very much like signing a blank check - so make sure you choose wisely and understand the laws that apply to the document.