What Is an Attorney-in-Fact?

What Is an Attorney-in-Fact?

Let me tell you directly: an attorney-in-fact, which you might also hear called an agent, gets empowered through a legal document known as a power of attorney to handle business, financial, and personal matters for someone called the principal. These people play a key role, whether they're managing your finances or signing legal agreements on your behalf. Remember, unlike attorneys-at-law, attorneys-in-fact don't need any legal qualifications, but they carry heavy responsibility and must always put the principal's interests first.

You should know that the rules for power of attorney differ by state. It's possible to grant this power to more than one person, and if you do that, the document needs to specify whether actions require a simple majority or full unanimity.

Understanding the Relationship Between Attorney-in-Fact and Power of Attorney

Here's the core of it: an attorney-in-fact is legally appointed to act for another person—the principal—in legal or business situations, and they're often just called the agent. This appointment happens through a power of attorney document, which lets them make decisions like signing documents, managing bank accounts, or selling property for you.

You don't have to pick a lawyer for this role, but whoever you choose must act in your best interests, follow the POA's instructions, keep your affairs confidential, and maintain records of everything they do. Let me be clear: this is not the same as hiring a lawyer. A lawyer is licensed to practice law, give advice, and represent you in court, while an attorney-in-fact is just someone you've authorized to act for you.

Exploring the Different Types of Power of Attorney

Attorneys-in-fact get one of two basic types of power of attorney. With a general POA, they can conduct business, sign documents, and make financial decisions for you broadly. A limited POA, sometimes called a special power of attorney, restricts them to specific transactions or decisions as outlined in the document.

I must warn you: when assigning this power, choose someone you truly trust.

Key Powers and Responsibilities of an Attorney-in-Fact

If it's a general power of attorney, the attorney-in-fact can do anything you'd reasonably do yourself, like managing bank accounts, trading stocks, paying bills, or cashing checks. For a limited one, they get broad powers in certain areas but not others—for instance, they might handle transactions you direct but not make independent business decisions, or it could be as narrow as just signing documents for a specific property sale.

Differences Between an Attorney-in-Fact and an Attorney-at-Law

As I've said, an attorney-in-fact doesn't need to be a lawyer, whereas an attorney-at-law is someone who's passed the bar and can represent clients in court. Their roles differ too: the attorney-in-fact makes decisions for you, while the attorney-at-law advises you and represents you without deciding on your behalf.

One important point: a durable power of attorney keeps going even if you become incapacitated, which would otherwise end it.

The Significance of a Durable Power of Attorney

Normally, a power of attorney ends if you die, become incapacitated, revoke it in writing, or if it reaches a set date or fulfills its purpose. But if it's durable, the attorney-in-fact keeps the authority during your incapacitation, handling things like finances or health care. It can be set to spring into effect on a trigger like incapacitation, and you should name successors in case the first choice can't serve.

Why Do You Need an Attorney-in-Fact?

You might designate one for convenience, like if you're closing a deal but can't be there in person. Or it could be for when you can't act yourself due to incapacity, travel, illness, or an accident.

Does an Attorney-in-Fact Need To Be a Lawyer?

No, it can be anyone you designate, often a family member or friend. You could choose a lawyer, but it's not required.

What's the Difference Between an Attorney and Attorney-in-Fact?

An attorney is a licensed professional who practices law, while an attorney-in-fact is just someone authorized to act for you.

Are Power of Attorney and Attorney-in-Fact the Same Thing?

No. The attorney-in-fact is the person you designate, and the power of attorney is the document that gives them that power. They need to show it as proof when acting for you.

What Are the Liabilities of Being an Attorney-in-Fact?

As an attorney-in-fact, you're legally bound to act in the principal's best interests and follow the POA. If you don't, you could be liable for damages—like if a bad financial decision causes a loss, or if you act outside the POA's scope, such as selling property you're not authorized to. Review the document carefully and get legal advice if needed to avoid this.

The Bottom Line

An attorney-in-fact is entrusted via power of attorney to act for a principal, with authority that can be general or limited, and durable ones persist through incapacitation. Pick someone trustworthy, like family or a friend, and if appointing multiples, specify voting rules in the document.