Attorney-in-fact: Overview, definition, and example
What is an attorney-in-fact?
An attorney-in-fact is a person or entity legally appointed to act on behalf of another person (the principal) in specific financial, legal, or business matters. The authority granted to an attorney-in-fact is outlined in a legal document called a power of attorney (POA), which specifies the scope and limits of their decision-making power.
For example, a business owner traveling abroad might appoint a trusted employee as their attorney-in-fact to sign contracts or handle financial transactions in their absence.
Why is an attorney-in-fact important?
An attorney-in-fact is important because they help individuals and businesses manage affairs when the principal is unavailable or unable to act. This can be critical in situations such as business operations, estate planning, or medical decision-making.
For businesses, appointing an attorney-in-fact ensures continuity in decision-making, allowing essential transactions to proceed without delay. For individuals, it provides a trusted representative to handle financial or legal matters when they cannot do so themselves.
Understanding an attorney-in-fact through an example
Imagine a real estate investor who owns multiple properties but frequently travels. To ensure smooth management of their assets, they grant power of attorney to a property manager, making them the attorney-in-fact. This allows the property manager to sign lease agreements, handle maintenance contracts, and manage tenant disputes on behalf of the investor.
In another scenario, an elderly individual grants power of attorney to their adult child, allowing them to manage bank accounts, pay bills, and make medical decisions if they become incapacitated. This ensures that their financial and healthcare needs are taken care of without legal complications.
An example of an attorney-in-fact clause
Here’s how an attorney-in-fact clause might appear in a power of attorney document:
“The Principal hereby appoints [Name] as their attorney-in-fact, granting them full authority to act on their behalf in matters related to [specific powers, such as financial transactions, legal agreements, or property management], effective immediately and remaining in effect until revoked in writing.”
Conclusion
An attorney-in-fact is a legally appointed representative who acts on behalf of another person in financial, legal, or business matters. Clearly defining their powers in a power of attorney document helps ensure smooth decision-making and protects the interests of both the principal and the appointed representative.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.