An irrevocable power of attorney gives an agent the power to make decisions for the principal, but cannot be revoked or changed. It is less common than a revocable power of attorney. Sunset clauses can be added to end the contract on a specific date or condition. Irrevocable powers of attorney are often used for specific financial matters.
An irrevocable power of attorney is a legal document that gives one party, called an agent or attorney, the power to make decisions for the creator or principal. For example, a person who is given power of attorney can make financial decisions for the principal and even decide where he should live and who should take care of him. However, this type of power of attorney is irrevocable, which means that the principal cannot revoke or change it if he later changes his mind. Because an individual may have reason to change his mind, irrevocable powers of attorney are less common than revocable ones.
With most powers of attorney, the principal signs the check while sane. He chooses to allow another person to make decisions for him, but retains the right to regain control of his affairs or to appoint another person as his agent in a new power of attorney. He might do this, for example, if the agent he has chosen has made bad decisions or if the agent’s help is no longer needed. However, he would not have this automatic right with an irrevocable power of attorney.
Sometimes an irrevocable power of attorney is not expected to continue indefinitely and includes a clause that ends the contract on a specific date. This means that if a person wants to create an irrevocable power of attorney that gives another party financial control over his affairs, he can add a clause that terminates the agreement after a specified period of time. Sometimes such clauses end the power of attorney situation once a particular condition has been met rather than on a specific date. In both cases, these clauses are often referred to as “sunset clauses”.
Because many people would prefer to retain the right to revoke a power of attorney if necessary, many people reserve irrevocable powers of attorney to deal with specific financial matters. For example, a person may want to give a broker or agent the power to control her assets in exchange for serving her exclusively. This power can be granted as part of a global contract and cannot be terminated by the principal unless the agent consents to it. A person can also create an irrevocable power of attorney that remains in effect until the agent has sold or transferred the party’s assets. At that point, a sunset clause may allow the deal to be terminated.
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