Graded Financial Services

Definition of Trust:

A power of attorney document is an extremely important part of estate planning.
A power of attorney is a document that gives another person an authority to make legal decisions and take action on your behalf in accordance with the document. This person is known as the “Attorney ” or “Agent” and can be your spouse, partner or anyone you trust. A power of attorney can apply to all your affairs or be limited and apply only to particular assets or accounts you own.

The Power of Attorney can be classified into two categories:
1. General Power of Attorney: Here 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/(s).
3. Durable Power of Attorney: A Power of Attorney which specifically says otherwise, agent’s power ends if principal become mentally incapacitated. However, a power of attorney may say that it is to remain in effect in the event of future incapacity of the principal.
   To ascertain whether power of attorney is of general or special in nature, the subject matter in respect of which power is conferred is to be seen accurately.
4. General Power of Attorney: Here 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.

Persons Competent To Execute:

A power of attorney can be executed by any person who is competent to enter into a contract. However, the married women can execute powers of attorney even if they are minors. A company while executing power of attorney must make conformity with the ‘Articles of Association’ and its common seal. A person must be competent to give power to the appointed person so that it will not affect the legality of the instrument/deed of power of attorney.

Powers of Attorney by Two or More Persons:

A power of attorney may be executed by two or more persons jointly in favour of one or more persons. When there are several persons as attorneys, a complete authorisation in letter to be given by one of them for acting severally. A clause should be included while drafting the deed of power of attorney that all the attorneys should act jointly or separately.

Duration of granted Power:

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. Duration of the power will depend upon the type of the attorney or there may be a fixed period of power granted by the principal which must be included in the deed.

Trust-Private and Public:

When the purpose of the trust is to benefit an individual or a group of individuals or his or their descendants, for any legal person and who is capable of holding property, it is a private trust. When the purpose of the trust is to the benefit the public or any section of the public, it is public trust.

Revocation of Power of Attorney:

A power of attorney may be revoked at any time by the principal or donor by giving a written notice to the agent, unless it is for a particular fixed period. Revocation is usually possible when principal dies or becomes insane or becomes bankrupt. The principal himself can revoke the power of attorney, if the business for which the agent was appointed is over as mutually agreed upon by the principal and agent. In case, if principal has named a spouse or registered domestic partner as his agent, his or her authority to act under the power of attorney is automatically terminated in the event of divorce, legal separation or termination of the registered domestic partnership.

Registration:

A power of attorney is not compulsorily registrable unless it creates an interest in any immovable property i.e. charge in favour of donee. Power of Attorney should be authenticated by a Sub-Registrar only, otherwise it must be properly notarized by the notary especially where in case power to sell land is granted to the agent. Registration of power of attorney authenticates the deed of power of attorney. Stamp Duty: A stamp duty has to be paid compulsorily by the principal or donor in the jurisdictional registrar’s office.

Powers which can be granted to the Attorney:

• 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.

Qualifications of an Attorney:

It is the duty of the Principal to appoint a responsible person as agent who should act with utmost good faith. An attorney is a person who has been appointed by the donor to act on his behalf. An ideal attorney is that who must be willing to act in that capacity and he has to be impartial having integrity. An attorney should be loyal to the donor and should not disclose any confidential matters related to the business.