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 the 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.

RELATED TERMS
  1. Special Power Of Attorney

    Special power of attorney is a written authorization that grants ...
  2. Power of Attorney of Property

    Power of attorney of property is a legal document that transfers ...
  3. Form 2848: Power of Attorney and ...

    Form 2848: Power of Attorney and Declaration of Representative ...
  4. Specific Use

    Specific use is a type of authorization for an individual with ...
  5. Power of Attorney

    Power of attorney is a legal document giving a person broad or ...
  6. Healthcare Power Of Attorney - ...

    A legal form that allows an individual to empower another with ...
Related Articles
  1. Retirement

    The Importance of Durable Financial Power of Attorney

    Having a durable financial power of attorney in place can save you from having the court decide who handles your finances when you can't.
  2. Managing Wealth

    Why Keep Medical & Financial Powers of Attorney Separate?

    Representing your interests in financial matters is a very different job from communicating and advocating for your wishes with doctors.
  3. Financial Advisor

    How To Pick The Right Lawyer

    Find out what factors to consider before hiring an attorney.
  4. Investing

    Attention Home Buyers: Why You Need a Lawyer

    Property transactions are complex and subject to specific state/local rules. Hiring a lawyer can simplify the process.
  5. Taxes

    How to Hire a Bankruptcy Lawyer

    How do you find the right bankruptcy lawyer? What you should look for to determine the right attorney for you.
  6. Retirement

    Power of attorney: When you need one

    Having a power of attorney ensures that you select who will act for you when you are unable to handle your affairs. Without one, the courts decide.
  7. Financial Advisor

    5 Tips for Cutting Divorce Costs

    A divorce can be difficult and expensive, but there are several ways for you to minimize some of costs associated with the process.
  8. Small Business

    Hiring A Really Competent Patent Attorney

    Use this guide to find a well-qualified attorney to guide your application through the complex patenting process at the best possible price.
  9. Retirement

    Are Do-it-Yourself Online Wills Right for You?

    An online will site can be an inexpensive and fast way to get that all-important will completed. Find out if this is the right solution for your situation.
  10. Retirement

    Have This Conversation Before It's Too Late

    As Baby Boomers continue to retire, age and pass, it's important for Millenials talk to them about their estate and financial plans.
Hot Definitions
  1. Intrinsic Value

    Intrinsic value is the perceived or calculated value of a company, including tangible and intangible factors, and may differ ...
  2. Current Assets

    Current assets is a balance sheet account that represents the value of all assets that can reasonably expected to be converted ...
  3. Volatility

    Volatility measures how much the price of a security, derivative, or index fluctuates.
  4. Money Market

    The money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities ...
  5. Cost of Debt

    Cost of debt is the effective rate that a company pays on its current debt as part of its capital structure.
  6. Depreciation

    Depreciation is an accounting method of allocating the cost of a tangible asset over its useful life and is used to account ...
Trading Center