# Understanding Attorney-in-Fact: Types, Powers, and Responsibilities

![Attorney-in-Fact: A person authorized to represent someone else in business, financial, and private matters.](https://www.investopedia.com/thmb/fwtJSsYLkBLYqeME7OUL6yqrpPM=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/Attorneyinfact_final-5efc76643fbb4e7da83c0f78a6ba1c87.png)

*— Investopedia / Michela Buttignol*

## What Is an Attorney-in-Fact?

An attorney-in-fact, also known as an agent, is empowered through a legal document called a power of attorney to act on behalf of a principal in business, financial, and personal matters. Whether managing finances or executing legal agreements, these individuals serve a critical role. Unlike attorneys-at-law, attorneys-in-fact do not require legal qualifications, but they carry significant responsibility and must prioritize the principal's interests.

The rules regulating power of attorney vary from state to state. Power of attorney may also be granted to more than one person. In such a case, it should be stated whether a simple majority or unanimity is required for an action to be taken.

### Key Takeaways

*   An attorney-in-fact is a person authorized to act on behalf of another in legal and business matters, designated through a power of attorney.
*   The power of attorney can be general, allowing broad authority, or limited, restricting actions to specific transactions.
*   An attorney-in-fact does not need to be a lawyer and can be a trusted family member or friend.
*   A durable power of attorney remains in effect even if the principal becomes incapacitated.
*   An attorney-in-fact is legally responsible for acting in the principal's best interest and can be held liable for any misuse of authority.

## Understanding the Relationship Between Attorney-in-Fact and Power of Attorney

An attorney-in-fact is a person who has been legally appointed to act on behalf of another person in a legal or business matter. The person appointing the attorney-in-fact is called the "[principal](https://www.investopedia.com/terms/p/principal-agent-relationship.asp)," and the attorney-in-fact is sometimes referred to as the "agent."

An attorney-in-fact is appointed through a legal document known as a power of attorney (POA), which gives them the authority to make legal and financial decisions for the principal. For example, an attorney-in-fact might be given the power to sign documents, manage a bank account, or sell property on behalf of the principal.

The attorney-in-fact doesn't have to be a lawyer but must act in the principal's best interests and follow the power of attorney's instructions. The attorney-in-fact is also required to keep the principal's affairs confidential and to keep records of all actions taken on behalf of the principal.

It's important to note that an attorney-in-fact is not the same as a lawyer or an attorney. A lawyer is a professional who is licensed to practice law, while an attorney-in-fact is simply a person who has been given the authority to act on behalf of another person.  

> **Important**
>
> Attorneys are trained in the legal system and are responsible for representing clients in legal matters, such as in court or in negotiations with other parties. Attorneys are also responsible for giving legal advice and guidance to their clients.An attorney-in-fact, on the other hand, is any person who has been appointed to act on behalf of another person in a legal or business matter.

## Exploring the Different Types of Power of Attorney

Attorneys-in-fact can be granted two basic types of power of attorney (POA).

*   **General** – A general power of attorney allows the attorney-in-fact to conduct business, sign documents, and make financial decisions for the principal.
*   **Limited** – Under a limited power of attorney assignment, also sometimes known as “[special power of attorney](https://www.investopedia.com/terms/s/special-power-attorney.asp),” the attorney-in-fact can be authorized to conduct certain transactions and make some decisions but not others. They are limited to the topics specified in the assigning document.

> **Warning**
>
> Anyone assigning attorney-in-fact should take care to choose someone they trust.

## Key Powers and Responsibilities of an Attorney-in-Fact

If the attorney-in-fact is designated by a general power of attorney, they are allowed to conduct any actions that the principal would reasonably take. This means an attorney-in-fact can manage bank accounts, trade stocks, pay bills, and cash checks for the principal.

With a limited power of attorney, the attorney-in-fact is granted broad powers in one or more areas but not others. For example, the attorney-in-fact could be authorized to carry out transactions at the direction of the principal but not to make business or financial decisions. It could also be narrower, such as only granting the right to sign documents related to the pending sale of a specific piece of property.

## Differences Between an Attorney-in-Fact and an Attorney-at-Law

As noted above, an attorney-in-fact need not be a lawyer. And another term for “lawyer” is “attorney-at-law.” If you have passed a state bar exam and are thus legally qualified in that state to prosecute and defend actions in a court on behalf of a client who has retained you, then you are an attorney-at-law.

Their functions are also different. An attorney-in-fact must make decisions for their principal, while an attorney-at-law makes no decisions for their client. Instead, they offer advice to their client and can represent them in the courtroom.

> **Important**
>
> When a power of attorney is deemed “durable,” it continues even after the principal becomes incapacitated, an event that would normally terminate it.

## The Significance of a Durable Power of Attorney

A power of attorney generally terminates when a person dies, becomes incapacitated, or consciously chooses to revoke it via a written, witnessed, signed, and notarized notice. It can also end if it has a set date or its purpose has been accomplished. However, if it has been designated as a “durable” power of attorney, the attorney-in-fact retains the power of attorney should a principal become incapacitated. In such a situation the attorney-in-fact can continue to make decisions for the principal, [including in matters of finance and health care](https://www.investopedia.com/articles/managing-wealth/042216/medical-vs-financial-power-attorney-reasons-separate-them.asp).

A durable power of attorney takes effect upon a [triggering event](https://www.investopedia.com/terms/t/triggeringevent.asp), like the principal's incapacitation, if granted ahead of time. This is also called a “springing” power of attorney. It's wise to name successors, as the original choice might be unavailable or unwilling to serve.

## Why Do You Need an Attorney-in-Fact?

There can be a variety of reasons to designate an attorney-in-fact. It can simply be for convenience, if, for example, you are buying or selling an asset and it is a burden for you to appear in person to close the deal. It can also be for cases in which you cannot act for yourself, whether due to physical or mental incapacity or something less serious, such as travel, illness, or accident.

## Does an Attorney-in-Fact Need To Be a Lawyer?

No. An attorney-in-fact can be anyone you wish to designate as such. Often they are a family member or close friend. That said, there is nothing to prevent you from choosing a lawyer, also known as an “attorney-at-law,” as your attorney-in-fact.

## What's the Difference Between an Attorney and Attorney-in-Fact?

It's important to note that an attorney-in-fact is not the same as a lawyer or an attorney. A lawyer is a professional who is licensed to practice law, while an attorney-in-fact is simply a person who has been given the authority to act on behalf of another person.

## Are Power of Attorney and Attorney-in-Fact the Same Thing?

Absolutely not. An attorney-in-fact is someone whom you designate to act on your behalf in business, financial, or personal matters. A power of attorney is a legal document that names and transfers power to your attorney-in-fact. When making decisions on your behalf, the attorney-in-fact is usually required to show the power of attorney as proof of their authority.

## What Are the Liabilities of Being an Attorney-in-Fact?

As an attorney-in-fact, you are legally responsible for carrying out the duties and responsibilities assigned to you by the principal. This means that you have a legal obligation to act in the best interests of the principal and to follow the instructions and guidelines set forth in the power of attorney. If you fail to fulfill your duties as an attorney-in-fact, you may be held liable for any damages or losses that result from your actions or inactions. For example, if you make a financial decision on behalf of the principal that results in a loss of money, you may be held financially responsible for that loss.

Additionally, you may be held liable for any actions you take on behalf of the principal that are outside the scope of the power of attorney. For example, if the power of attorney specifically states that you are not authorized to sell the principal's property, but you go ahead and sell it anyway, you could be held liable for any losses that the principal incurs as a result of the sale. To avoid potential liability, it's important to carefully review the power of attorney and make sure you fully understand your responsibilities as an attorney-in-fact. You should also seek legal guidance if you have any questions or concerns about your duties as an attorney-in-fact.

## The Bottom Line

An attorney-in-fact, also known as an agent, is entrusted with the authority to act on behalf of a principal through a power of attorney, which outlines the scope of responsibilities. This authority can be general, allowing broad decision-making powers, or limited to specific actions. A durable power of attorney continues to grant these powers even if the principal becomes incapacitated.

[Choosing an attorney-in-fact](https://www.investopedia.com/articles/personal-finance/101514/power-attorney-do-you-need-one.asp) is a critical decision; it’s best to select someone you trust, like a family member or close friend. Clearly specify in the power of attorney whether decisions require a majority vote or unanimity if multiple agents are appointed.   

> **Article Sources**
>
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>     
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