What Is Meant by Power of Attorney?

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A power of attorney is an individual who has the power to act on another's behalf. A person may give one or more individuals temporary or permanent authority, and the power may be general or limited to a particular activity, according to the American Bar Association.

When a power of attorney is named, that individual is often referred to as the agent or attorney-in-fact, as stated by the American Bar Association. With a signed document, also referred to as a power of attorney, the agent can act on another person's behalf. For most transactions, the agent is required to present the power of attorney document.

Many individuals assign a power of attorney for convenience or in preparation for situations in which they are unable to act on their own behalf due to absence or incapacitation, explains the American Bar Association. For example, if someone is temporarily residing in a foreign country and needs to sell a vehicle in his country of origin, he may assign a power of attorney to conclude the transaction. Another example of a good reason to assign a power of attorney is if an individual is in an accident and becomes temporarily disabled. In this instance, a power of attorney can mange that individual's personal or business affairs while he is unable to do so.