Glossary and Definitions
Power of Attorney (South Africa)
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A power of attorney is a legal document that is used to give legal authority to someone else (such as a relative or friend) to make decisions or do certain things on your behalf. The person who signs the Power of Attorney (gives up the authority) is called the Principal, and the person who is given the authority is called the Agent or Attorney-in-Fact. There are many reasons one may decide to make a Power of Attorney, such as illness, disability, or cases where the Principal is travelling and cannot be present to sign legal forms. A Power of Attorney does not necessarily mean that the Principal can no longer make decisions - it just means that another person may act for them also. The Principal may revoke the Agent's authority at any time if he or she is not satisfied with the Agent's performance.
Common Examples of Powers Granted to an Agent include the following:
- Managing your money, bank accounts, and safety deposit boxes
- Selling, mortgaging, and managing your property
- Entering into contracts on your behalf, settling claims
- Filing tax returns and handling government benefits
- Maintaining business interests
- Planning your estate and financial gifts
Because the Agent has an important job, often there is an additional clause in a Power of Attorney to appoint a second Agent should the first Agent be unwilling or unable to perform his or her duties. This person is called a 'Successor Agent' or 'Successor Attorney-In-Fact'.
There are several subtypes of Power of Attorney. One type, a Health Care Power of Attorney (not discussed here), is used to specify who will make health care decisions for the Principal if they become incapacitated. A Power of Attorney can be General (allowing the Agent to act in many situations) or Specific (limiting the Agent's power to a few specific areas). The timing of a General or Specific Power of Attorney can also be adjusted. A Non-Durable Power of Attorney comes into effect immediately and stays effective until the Principal revokes it, or becomes incompetent or dies. This type of document is often used for a specific transaction. A Durable Power of Attorney enables the Agent to act for the Principal even after the Principal is not mentally competent or physically able to make decisions. This document may also come into effect immediately and can also be revoked by the Principal or at the time of the Principal's death. Finally, a Springing Power of Attorney is designed to become effective only upon the occurrence of a certain event chosen by the Principal (such as illness or disability). Often, this document depends upon the Principal's assessment by a physician that he or she is no longer competent to handle financial affairs. This document may be revoked by a court, or by the death of the Principal.
Once you have decided on which type of Power of Attorney you wish to create, you will need to get the document properly signed. The Principal must be mentally competent at the time of signing (so he or she can truly understand the powers given up), and a physician assessment should occur if there is any doubt of the Principal's competence. Furthermore, the document should also be notarized. Notarization helps ensure that the proper parties are signing the document, and that each party understands the implications of signing. It also adds validity to the document should anyone wish to challenge it.