A power of attorney is a legal document by which you can appoint and authorize another person (usually a trusted friend, family member, colleague or adviser) to act on your behalf and to legally bind you in that respect. While most people fail to see the importance of having a power of attorney, there are many compelling reasons why they should be used.

Suppose, for example that:

• you are going to be out of the country for an extended period, and need someone trustworthy to manage your business affairs while you’re away;
• you wish to acquire property in another town or city, and you need to authorize a local to sign and lodge documents on your behalf;
• you’re getting a little bit older and wish to appoint someone you know and trust to manage your business or property for you; or
• you wish to appoint someone to make financial and legal decisions or personal care decisions on your behalf if you become incapacitated and unable to make such decisions yourself.

A power of attorney can be used to facilitate your needs in each of these scenarios.

The person giving the power of attorney is referred to as the ‘principal’, ‘donor’ or ‘grantor’ while the recipient is called the ‘agent’, ‘attorney-in-fact’ or just plain ‘attorney’ (which doesn’t mean they have to be a solicitor or legal practitioner!).