Power of Attorney in India
A power of attorney document is an extremely important part of estate planning yet one of the most misunderstood. It is often convenient or even necessary to have someone else act for you as there is advancement in the business and commerce transactions.
As many people confuse the power of attorney (POA) with a will (Probate), but these documents are two very different things and have two very different functions. A will comes into effect on the day person die. A POA applies during a person’s lifetime and ceases to apply when he dies. So you actually need both a POA and a will as they complement, and do not overlap, each other.
To add a twist to the subject, there are two types of POA: one for property and one for personal care. These two types are completely separate. They deal with different areas of your life and both are required for effective estate planning.
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Power of Attorneys are mainly classified into two categories:
1. General Power of Attorney: A general power of attorney is one by which an instrument is executed by the principal authorising the agent to do certain acts in general on his behalf. The word ‘General’ here means that the power must be general regarding the subject matter and not general with regard to powers in respect of a subject matter. If the subject matter is not general but restricted to something either specific or specifically mentioned by the principal while drafting an instrument then it will not constitute a general power of attorney. It is otherwise called as limited power of attorney.
2. Special Power of Attorney: A special power of attorney is one by which a person is appointed by the principal to do some specified act or acts. In this type of power of attorney, an agent conferred with a power to do specific act in a single or specified transactions in the name of the principal .
A power of attorney is legal written document which has more legal value and the authenticated attorney will be presumed by the court as legal document under ‘Indian Evidence Act, 1872’. According to the Section: 85 of ‘Indian Evidence Act, 1872’, which provides that the court shall presume that every document purporting to be a power of attorney, and has to be clearly authenticate and executed before the notary or magistrate. If there is any issue arises concerning to the genuineness of the attorney then proof of its execution can be called for the verification.
A general power of attorney remains in force unless expressly revoked or determined by the death of either of the party. A special power of attorney will be in force until the specified act is not completed.
Legal Powers Which Can Be Granted To The Attorney: Broadly speaking a power of attorney provides an agent “all powers that the principal has” to manage the principal’s financial affairs or make health care decisions may be enough for many purposes.
An agent may be authorised to:
To execute all contracts, deeds, bonds, mortgages, notes, checks, drafts, money orders.
To manage, compromise, settle, and adjust all matters pertaining to real estate.
To lease, collect rents, grant, bargain, sell, or borrow and mortgage.
To sell any and all shares of stocks, bonds, or other securities.
To file, sign all tax returns, insurance forms and any other documents.
To enter into contacts, and to perform any contract, agreement, writing, or thing to make, sign, execute, and deliver, acknowledge any contract, agreement.
To make health-care decisions for the donor or his minor children.
To sue on behalf of the principal.
An attorney holder is a person who is authorised by donor legally. An attorney must not exceed the authority given under the power of attorney. If the attorney does exceed their authority, he or she may be liable for any damages suffered by the donor or others. The attorney may, however, do all those acts which are authorised, but only by a particular method, if the power of attorney so indicates. If there is a breach of any condition by the attorney then he shall be liable to the donor except in a case where he has acted reasonably. If there is some doubt as to the wording of the power of attorney, a solicitor should always be consulted. The attorney holder must also act towards the donor with the utmost good faith and tell the donor the nature and extent of any interest which may conflict with his or her duty. An attorney may pass on his or her powers and duties to another person but only if authorised to do so by the power of attorney
With a power of attorney, an agent is often entrusted with important decisions. And the agent may have access to some or all of Principal’s money or other property. If the agent is not trustworthy, serious problems can result. For example, if the agent is dishonest and runs away with Principal’s money, it may be difficult or impossible to get the money back. An agent is not permitted to use principal’s property for his or her own benefit unless he is expressly authorised to do so. Also, a principal will ordinarily be bound by the agent’s acts (even foolish acts) and will be responsible for the agent’s negligence while the agent is acting for the principal. For example, if an agent is authorized to manage your financial affairs and signs a contract to purchase something on your behalf, you will ordinarily have to pay for it, like it or not. It is obviously important to choose a trustworthy agent; if no trustworthy candidate is available, a power of attorney should not serve its purpose.
A power of attorney is an essential legal document which can be admitted as a evidence in the court of law whenever there is any breach of trust by the attorney holder. It’s therefore essential that principal has great confidence in his designated attorney. An agent must be someone principal can trust, without reservation, to use his property for him and not for themselves, or anyone else.