General Power of Attorney

What is a General Power of Attorney?

The General Power of Attorney is a document used by a person ("Principal") to plan their future and decide who will make decisions on their behalf to manage their affairs in their absence or inability to act. A Power of Attorney is most frequently used in the event of a Principal's temporary or permanent illness or disability or when the Principal is unable to be present to sign necessary documents or do necessary acts.

What is the difference between a General Power of Attorney and a Power of Attorney for Property?

A General Power of Attorney for Property grants the attorney the authority, at the principal's discretion, to manage the principal's properties. This includes activities such as buying and selling real estate, property development, and obtaining necessary licenses and permissions. On the other hand, a General Power of Attorney is used for delegating authority related to other general purposes including banking transactions, legal representations, business formations, etc.

What is the difference between a Will and a General Power of Attorney?

A will come into effect only after the death of the testator or maker of the will. It mainly focuses on how the assets and belongings of the testator will be distributed and who will take care of their dependents after death. Power of Attorney is effective during the lifetime of the principal when the principal is unable to take care of things due to health issues or other factors.

Is it mandatory to have a General Power of Attorney?

No, it is not mandatory. However, it is better if someone anticipates being unavailable to manage their affairs. Having a written General Power of Attorney helps both the principal and attorney to be on the same page. The document can be used as proof of authority for the attorney to act on behalf of the principal even before courts and tribunals.

What does the "Principal" mean?

The principal is the person who grants the authority to manage the affairs mentioned in the General Power of Attorney on behalf of the principal.

What does the "Attorney" mean?

The attorney is the person or entity who is authorized to act on behalf of the principal. The attorney is obligated to work on behalf of the principal as per the General Power of Attorney document.

What is not allowed in a General Power of Attorney?

The attorney cannot be granted any rights the principal does not have or which is illegal including fraudulent activities, forging documents, etc.

Who can enter into a General Power of Attorney?

The power of Attorney can be used by any individual above the age of 18 years and who is competent to enter into a contract. In the case of a minor, only the guardian of such minor can enter into a Power of Attorney.

The Attorney can be either an individual or an entity. Any person/entity eligible to enter into a contract can be an Attorney. There is no limit to the number of attorneys appointed under a Power of Attorney.

What is the duration of a General Power of Attorney?

The Power of Attorney can be created for an indefinite period and continue even if the Principal is unable to make decisions due to mental or physical incapacity or for a period till the Principal is unable to make decisions due to mental or physical incapacity or for a fixed period mentioned under the Power of Attorney itself.

What has to be done once a General Power of Attorney is ready?

The Power of attorney will be legally binding when it is printed on non-judicial stamp paper or e-stamp paper and signed by each party and has been dated. The value of the stamp paper would depend on the state in which it is executed. Each state in India has provisions in respect of the amount of stamp duty payable on a power of attorney. Information regarding the stamp duty payable can be found on the State government websites.

Is it necessary to notarize a General Power of Attorney for it to be valid?

No, however, notarization adds the authenticity of a General Power of Attorney and some institutions example banks require the notarization to accept the document. In case the Principal is located in India, the Power of Attorney needs to be Notarized in India and in case the person living abroad the document needs to be executed before the respective embassy officer of that particular country.

Is it necessary to have witnesses for a General Power of Attorney?

Yes, most institutes require two witnesses to accept a Power of Attorney. The witnesses must be above the age of 18 years and parties not related to the General Power of Attorney.

Can the General Power of Attorney be terminated?

Yes. The Power of Attorney gets revoked in the case of:

• The death of the Principal.
• Invalidation of the document by a court.
• The attorney is unable to do the duties.
• The Principal is unable to make decisions due to mental or physical incapacity.
• Revocation in writing by either party.

Usually, the Principal issues the Power of Attorney during the period of his/her lifetime. But the Principal can specifically mention in the Power of Attorney if the document exists beyond the death, cannot make decisions due to mental or physical incapacity, or bankruptcy of the Principal.

Even the irrevocable Power of Attorney can be revoked in certain situations like the Attorney's incapacity to do the duties under the document, the Attorney not acting in the best interest of the Principal and so on.

What are the authorities that can be granted under a General Power of Attorney?

The following are some of the authorities that are often granted under a General Power of Attorney:

• Business operations: the Attorney can be entrusted with managing the businesses of the Principal including setting up, management, and closure of business ventures.
• Partnership: setting up, management, dissolution and so on of the partnership firm in which the Principal is a partner.
• Company: incorporation, management, documentation, representation, closure, and so on of the companies with which the Principal is involved.
• Investments: to deal in the stocks, debentures, provident funds and so on of the Principal.
• Banking: to open, operate, transact, close down, bank accounts and do other relevant transactions.
• Loan: to apply for, manage, transfer, settle the loan accounts and other borrowings on behalf of the Principal.
• Insurance: to join, renew, claim, and transfer insurance on behalf of the Principal.
• Representation: represent the Principal in front of various authorities as a part of personal issues or concerning the businesses.
• Legal: to appoint solicitors to initiate legal proceedings in competent forums or courts, settlement of cases, etc. on behalf of the Principal.
• Sub-Attorney: appoint sub attorney or agents in case the main Attorney is unable to or unwilling to act on the basis of the Power of Attorney.

What must a General Power of Attorney contain?

The General Power of Attorney covers the following major areas:

• Parties involved: the details of the principal and attorney including name and address.
• Scope of authority: a detailed outline of the powers granted to the Attorney.
• Duration: the duration can be for a specific period, conditional on happening something, or until terminated by either party.
• Termination: defines how either party can terminate the General Power of Attorney.

Which laws are applicable to a General Power of Attorney?

The general rules of the Powers of Attorney Act, 1882 and the Indian Contract Act, 1872 will be applicable here.

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