The power of attorney may seem like a legal jargon that only those who are well-versed in the technicalities of the law could understand. That is usually the case if you have encountered this term for the first time. However, nothing is complex or incomprehensible about it.

The term refers to a legal document that allows you to appoint someone who can make important choices for yourself when time comes you can no longer do it for your own. The person you appoint may be a family member, a relative, or a friend whom you are confident enough to make the best choices for you, especially when it comes to decisions regarding your health and finances. If you designate someone whom you trust as your agent, you can have peace of mind that the person can make decisions for you according to your best interest. The agent is also called the attorney-in-fact. Do not be misled by the term, though, because an attorney-in-fact does not have to be a lawyer. Your document also has to be tailored to your particular needs and wishes so that you have nothing to worry about in the future.

To put it simply, this legal term is a medium for granting an individual the right to make medical, financial, and other decisions on your behalf. Easy to understand, isn’t it?

The authority to manage another person’s affairs may begin immediately or only when the principal can no longer make decisions on his or her own. The latter scenario happens when the principal is out of the country for a while or when he or she becomes mentally incapacitated.

Granting someone a legal authority to decide on your behalf does not necessarily mean you cannot make decisions for your own anymore. It only means that at the same time, another person can also make choices for you—so you are sharing the right to decide with your agent. For example, if you are on a business trip abroad, you can designate someone to pay your bills or do bank transactions on your behalf. Your agent will only follow your orders, so long as you are mentally capable of making decisions for yourself. The agent also takes charge of keeping and organizing records of all transactions he or she made on your behalf.

As the principal, you have the power to decide the amount of authority you will grant to your agent. You can appoint him or her to manage most of your financial and personal affairs or to handle only a specific aspect of your life.

The laws regarding power of attorney vary from one state to another. However, a number of guidelines are common among states, and these rules must be strictly observed by both the principal and the agent. For example, two legal requirements must be met. First, the agent must not be mentally disabled and is not easily influenced by others. Second, at least two witnesses must sign the documents. Thus, you must discuss all the applicable state laws first with a lawyer before you and your agent sign any document.