An Irrevocable Power of Attorney is a legal document that is used to delegate legal authority to someone else. The individual signing the document of power of attorney is known as the Principal. The irrevocable power of attorney endows the legal authority of one individual onto another.
The individual receiving the legal authority by way of the irrevocable power of attorney is known as an agent or attorney-in-fact. This enables the agent to make financial, property, and other legal decisions for the Principal. The term attorney essentially means the power of one to be authorized and act on behalf of another. This irrevocable power of attorney is not restricted to lawyers.
A principal can give the attorney, in fact, broad sets of legal authority or very limited authority depending upon the irrevocable power of attorney. The kinds of authority that can be granted by way of a power of attorney are as follows: –
- Buy, sell, maintain, pay taxes, and mortgage property
- Manage property
- Conduct banking transactions
- Make decisions regarding investments in stocks, bonds & mutual funds
- Make legal claims and conduct litigation
- Attend to tax and retirement matters
- Make gifts on behalf of the Principal
- Using assets to pay expenses and family members
- Buy and sell insurance policies and annuities
- Claim property
- Collect benefits from social security, medicare, or other government programs or civil or military service
- Operate small business
Reasons for Irrevocable Power of Attorney
An irrevocable power of attorney establishes a principal and agent relationship. A principal is a person on whose behalf the agent gets the power to act and vice versa. Further, a power of attorney states the limit of power being given to the agent with clarity.
Courts might grant an irrevocable power of attorney in cases where guardianship over children exists. Further, an irrevocable power of attorney might also be used in the scenario where medical decisions are required to be made.
Contents of an Irrevocable Power of Attorney
It should include clauses related to essential particulars being the personal information of the Principal and the agent. Further, the various purposes for which the agent is authorized to act on the part of the Principal. Additionally, it shall also consist of two witnesses who shall attest to the contents of the irrevocable power of attorney.
Relevant Documents for an Irrevocable Power of Attorney
There aren’t any specific documents as such required for the drafting and execution of an irrevocable power of attorney. However, the identity proofs of the Principal and the agent are required to confirm the names and permanent addresses of the parties.
The identities of the parties should be scrutinized. Additionally, the documents stating a clear title of the properties/businesses shall also be examined. The agent shall be a trustworthy individual, and to maintain the relationship, a thorough background check of the agent shall also be done.
The procedure of an Irrevocable Power of Attorney
To draft a power of attorney, a professional will be required, following registration as per the applicable law. In the case where the irrevocable power of attorney is required to be registered, it needs to be printed on stamp paper. However, its registration is not mandatory unless the subject matter of the irrevocable power of attorney is immovable property.
Though, it is advisable to have the document registered at the respected sub-registrar’s office subject to the laws of the state. Following this, the irrevocable power of attorney must be notarized in the prescient of two witnesses, who shall be signatories to it and affirm the contents of the document.
Legal requirements of an Irrevocable Power of Attorney
The individual executing an irrevocable power of attorney must make sure that the parties are legally authorized to initiate the relationship. The Principal and agent must be of legal age to sign the document. There must be no coercion or undue influence. Further, the parties signing the irrevocable power of attorney shall do so in the presence of two witnesses.
The aid of a Professional in drafting the PoA
When drafting a power of attorney, it is pertinent that the individual drafting the irrevocable power of attorney has legitimate knowledge of legal jargon that shall be appropriately utilized while drafting. Any ambiguity, irrelevant to how small in the terms, can jeopardize the claims of the parties.
This makes it even more important to have a professional lawyer to assist with the drafting procedure. Having expertise in the area of documentation. A lawyer documenting the irrevocable power of attorney would be aware of the nitty grits of the legal procedures and requirements involved in drafting the irrevocable power of attorney.
Further, with the required expertise, the lawyer would also become necessary as he would guide the parties in signing the irrevocable power of attorney and make sure that mistakes that would create hindrances or render non-performance of the document could be eliminated. So the circumstance of further legal procedures doesn’t arise.
Now that we know, an Irrevocable Power of Attorney is a legal document that is used to delegate legal authority to someone else. The individual signing the document of power of attorney is known as the Principal. The irrevocable power of attorney endows the legal authority of one individual onto another.
It’s not a mandate to register a power of attorney unless the subject matter is an immovable property. A power of attorney is utilized in several matters like managing property, conducting banking transactions, making decisions regarding investments in stocks, bonds & mutual funds, making legal claims and conducting litigation, attending to tax and retirement matters, and making gifts on behalf of the Principal, etc.
It is an important instrument for establishing the Principal and agent relationship. However, a professional must be sought to draft this document owed to its legal technicalities. This is also necessary to avoid any legal complications that may arise in the future.
Power of attorney for the property of immovable nature must be registered, notarised, and attested by two witnesses. To know more about the procedure of drafting and registering an irrevocable power of attorney, get legal consultation.