What is a power of attorney?

A power of attorney is a legal document that grants one individual the authority to act on behalf of another individual in legal or financial matters. This document is often utilized when an individual wishes to delegate decision-making powers to someone else, either because they are unable to manage their affairs personally or because they prefer to have someone else handle specific responsibilities.

The authority granted can be broad or limited, depending on the terms outlined in the power of attorney. For example, a financial power of attorney might allow the agent to manage investments, pay bills, and make financial decisions, while a medical power of attorney might empower the agent to make healthcare decisions.

Understanding this definition clarifies why the other options do not represent what a power of attorney is. A contract between a business and a legal advisor does not convey the authority to act on behalf of another individual. A verbal agreement between family members lacks the formalities and legal enforceability associated with a power of attorney. Additionally, while appointing a guardian for minors is an important legal process, it is entirely different from the concept of a power of attorney, which is focused on granting authority rather than guardianship.