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What Is an Attorney-in-Fact?
An attorney-in-fact, also called an “agent,” is a person who is authorized to act on behalf of another person, known as the “principal,” typically to perform business or other official transactions. The principal usually designates someone as their attorney-in-fact by assigning them power of attorney, although a court may choose to assign it if the person being represented is incapacitated. The rules regulating power of attorney vary from state to state.
An attorney-in-fact is not necessarily a lawyer. Indeed, attorneys-in-fact don’t require any special qualifications at all. They can be a family member or close friend. Power of attorney may also be granted to more than one person. In such a case it should be stated whether a simple majority or unanimity is required for an action to be taken.
Key Takeaways
- An attorney-in-fact is someone who is designated to act on behalf of another person, whether in business, financial, or personal matters.
- An attorney-in-fact is designated through the granting of power of attorney, usually by the person who will be represented.
- An attorney-in-fact need not be an attorney-at-law, which another name for “lawyer.” The former makes decisions for a principal, while the latter advises and represents a client but is not involved in decision-making.
- Sometimes the courts can assign an individual power of attorney for another person if they have become incapacitated.
Understanding an Attorney-in-Fact
There are two basic types of powers of attorney granted to attorneys-in-fact.
- General – General power of attorney grants the attorney-in-fact not only the right to conduct any business and sign any documents on behalf of the principal, but to make decisions, including financial decisions, on their behalf.
- Limited – Under a limited power of attorney assignment, also sometimes known as “special power of attorney,” the attorney-in-fact can be authorized to conduct certain transactions and make some decisions but not others. They are limited to the topics specified in the assigning document.
Anyone assigning power of attorney should take care to choose someone they trust.
The Powers and Duties of an Attorney-in-Fact
If the attorney-in-fact is designated as a general power of attorney, they are allowed to conduct any actions that the principal would reasonably take. This means an attorney-in-fact would be able to open and close bank accounts, withdraw funds, trade stocks, pay bills, and cash checks—all on behalf of the principal.
With a limited power of attorney, the attorney-in-fact is granted broad powers in one or more areas but not others. For example, the attorney-in-fact could be authorized to carry out transactions at the direction of the principal but not to make business or financial decisions. It could also be narrower, such as only granting the right to sign documents related to the pending sale of a specific piece of property.
Attorney-in-Fact vs. Attorney-at-Law
As noted above, an attorney-in-fact need not be a lawyer. And another term for “lawyer” is “attorney-at-law.” If you have passed a state bar exam and are thus legally qualified in that state to prosecute and defend actions in a court on behalf of a client who has retained you, then you are an attorney-at-law.
Their functions are also different. An attorney-in-fact must make decisions for their principal, while an attorney-at-law makes no decisions for their client. Instead, they offer advice to their client and can represent them in the courtroom.
When a power of attorney is deemed “durable,” it continues even after the principal becomes incapacitated, an event that would normally terminate it.
Durable Power of Attorney
A power of attorney generally terminates when a person dies, becomes incapacitated, or consciously chooses to revoke it via a notice filed in court. It can also end if it has a set date or its purpose has been accomplished. However, if it has been designated as a “durable” power of attorney, the attorney-in-fact retains the power of attorney should a principal become incapacitated. In such a situation the attorney-in-fact can continue to make decisions for the principal, including in matters of finance and healthcare.
Durable power of attorney can be granted ahead of time on condition that it only takes effect due to a triggering event, such as when the principal becomes incapacitated. This is also called a “springing” power of attorney. In this case it is a good idea to name one or more successors, as the original designee may be unavailable or, due to changed circumstances, be unwilling to assume the responsibility of becoming an attorney-in-fact.
Why Do You Need an Attorney-in-Fact?
There can be a variety of reasons to designate an attorney-in-fact. It can simply be for convenience, if, for example, you are buying or selling an asset and it is a burden for you to appear in person to close the deal. It can also be for cases in which you cannot act for yourself, whether due to physical or mental incapacity or something less serious, such as travel, illness, or accident.
Does an Attorney-in-Fact Need to Be a Lawyer?
No. An attorney-in-fact can be anyone you wish to designate as such. Often they are a family member or close friend. That said, there is nothing to prevent you from choosing a lawyer, also known as an “attorney-at-law,” as your attorney-in-fact.
Are Power of Attorney and Attorney-in-Fact the Same Thing?
Absolutely not. An attorney-in-fact is someone to whom you consent to give your power of attorney. When making decisions on your behalf, the attorney-in-fact is usually required to show the written document providing power of attorney as proof of their authority.
The Bottom Line
An attorney-in-fact is someone who is granted authority to make decisions on behalf of another person, known as the “principal.” Such authority is granted via a written document providing power of attorney to the attorney-in-fact. Power of attorney can be either general or limited to certain specified transactions and topics. Typically, it only lapses if the principal dies, becomes incapacitated, or consciously revokes it through a notice filed in court. However, if it is a durable power of attorney, the attorney-in-fact will continue to serve if the principal becomes incapacitated.
Making a decision to appoint an attorney-in-fact should not be done lightly, and the person so designated should be a person or persons (you can appoint more than one) whom you trust. Family members and close friends are popular choices. If you appoint more than one, be sure to specify if decisions can be made by majority vote or must be unanimous.
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