Have you thought of making logical decisions concerning your finances, assets, intellectual property, etc through a third party, otherwise called the agent?. Irrevocable power of attorney would be a round peg in a round hole. Let us know more detail about ‘Irrevocable Power Of Attorney’.
Irrevocable Power Of Attorney
Irrevocable power of attorney is a legal agreement in form of a document between party one (The principal) and the party two (The agent), otherwise called the broker or the attorney that allows the principal to transfer irrevocably the power to make financial/assets decisions on behalf of him (the principal) to the agent.
As implied in the name, it is irrevocable. This means that it cannot be reversed once it has been signed by both parties till the expiration of the duration of the agreement otherwise called the sunset provision.
However, despite the caveat, irrevocable, there are conditions that would call for the revocation of this irrevocable power of attorney.
Where can irrevocable power of attorney be used?
- Publicly traded stocks: Irrevocable power of attorney can be used to transfer the power of decision making, voting, and every other right in the board meeting to the agent when he might not be able to attend the annual or biannual meetings in person. In this way, he still maintains his 100% right in the share by proxy as his interest would be fully protected by his agent to whom he has transferred this power legally.
- Health conditions: Some health conditions might result in the principal not being able to make sound judgments or decisions for himself/herself. In this situation, the Irrevocable Power of Attorney confers this exclusive right to make decisions on behalf of the principal to the agent.
- Court of law: Irrevocable power of attorney is a legal document that could be tendered as a shred of evidence in the court of competent jurisdiction
Conditions that might lead to revocation
Certain situations can lead to the revocation of this attorney.
- If the principal is no longer satisfied with the services of the agent: This could be on the grounds of incompetence, when he might feel that the agent is no longer capable of discharging his/her duties as contained in the agreement. This is because, as humans who expect results from the assignment we give people to carry out, despite the fact although this power to make the decision has initially been transferred, some questionable attitudes on the side of the agent might result in gross dissatisfaction on the principal and hence consequent request for revocation.
- When fraudulent activity lurks around: Just like in every relationship or partnership, having trust is an essential tool that would always sustain this agreement. In situations whereby this trust is breached leading to fraudulent activities that might put the principal at the tail end of an irrational decision, this power of attorney could be revoked.
- The death of any of the parties involved: The death of either of the parties involved would result in consequent termination and revocation of the power of attorney.
Advantages of it:
Irrevocable power of attorney is beneficial in the following ways;
- It grants the principal the opportunity of logical decisions concerning especially in areas/issues he is not too conversant with through the agent.
- The principal can afford to delegate functions while he focuses on other things for optimum effectiveness.
- It increases productivity on the side of the principal and enhances professionalism on the side of the agent.
- It gives legal cover, especially in the cases of misunderstanding or conflict that may arise amongst the beneficiaries of the principal like; the employees, the spouse, the children, family members, and business partners.
- It transfers the risk of poor decision-making from the principal to a professional agent.
Steps in getting irrevocable power of attorney
The following steps are prerequisites for getting irrevocable power of attorney;
- Contracting the agent: The first step in getting irrevocable power of attorney is to reach out to the agent who would be at the epicenter of the process. This is usually someone who is learned and understands the rudiments of the process.
- Counseling: This is another important session because the principal need to understand in clear terms what he is about to enter into.
- Drafting of the agreement: The attorney drafts the legal agreement in form of a document as agreed by both parties.
Notarization of documents
Notarization of a document is done to authenticate the documents and hence, make it fraud-proof. Notarization of documents is essential as it is proof that whatever document has been notarized by a certified body is risk-free of illegal involvements.
For both the power of attorney and any other document involved in the agreement to be found worthy of reference in any court of competent jurisdiction, evidence of notarization must be attached to it.
