Importance of Power of Attorney in India

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Importance of Power of Attorney in India

What is Power of Attorney

A Power of Attorney (POA) is a document that allows an individual to appoint a person or an organization to manage his/her affairs if he becomes unable to do so.

The person delegating authority under the POA is called the principal and the person to whom authority is being delegated is called the agent. This establishes a Principal-Agent relationship between the two persons which is primarily governed by trust.

A power of attorney document is an extremely important part of estate planning. It is considered expedient and necessary to have someone else act for you when there is an advancement in the business and commerce transactions.

What are some important facts about POA?

  • A Power of Attorney that has not been executed correctly holds no value.
  • A POA needs to be authenticated by a notary public certifying the mental soundness of the principal at the time of signing.
  • It is not compulsory to register a POA in India. However, it is advisable as getting a POA registered adds to its legal value. However, it compulsory to get a POA registered if it relates to transfer of immovable property.

What are the different types of Power of Attorney?

1. General Power of Attorney (GPA)

Under this vast powers are allowed to the agent to act on behalf of the principal. This type of POA can be useful to an individual when he is not in the country, or he is mentally incapable of taking care of himself and his affairs.

2. Healthcare Power of Attorney

This document enables the principal to nominate an individual who can make healthcare decisions concerning him when the principal himself is unable to do so. The decisions to be taken range from medical care and place of living to the food that the principal eats.

3. Financial Power of Attorney

This kind of Power of Attorney gives an agent the right to make financial decisions for the principal when he/she is either not present, or is unable to do so due to physical or mental incapability. Paying bills, making investment decisions, paying for healthcare and housing are some activities that require decision making under the Financial Power of Attorney.

What is Special and Durable Power of Attorney?


Special Power of Attorney

Specific powers are allowed to the agent by signing on this type of POA. If the principal does not wish to allow the agent to enjoy a wide spectrum of powers and requires to delegate authority only in respect of a particular task, he can do so by executing a Special Power of Attorney (SPA).

The validity of an SPA comes to an end as soon as the task(s) specified in it are completed.
Durable Power of Attorney

If the principal happens to become mentally unsound due to some reason while there is a POA in effect, he/she can sign a Durable Power of Attorney to ensure its validity or to avoid any kind of trouble later.

While preparing a POA, some important points to be kept in mind?

  • A POA cannot survive the principal’s death. I.e. the authority of an agent comes to an end as soon as the principal dies.
  • A POA can be cancelled in which case the agent and all such institutions where the agent acted on behalf of the principal should be notified in writing.
  • An individual of high integrity who can always be trusted to act in the principal’s best interest should be chosen as an agent.
  • Any suspicion of wrongdoing on the part of the agent should be reported to a law enforcement agency, or professional legal advice should be taken.

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