In our previous article, we discussed on “What is Power of Attorney”. For our part 2, we will be discussing more on the types of the Power of Attorney (“POA”), the difference, and the advantages and disadvantages of having a POA.

1. Revocable Power of Attorney

A revocable POA allows you (Donor) to rescind/revoke the powers granted to the recipient (Donee) at any time or at the occurrence of a specific event. The Donee cannot act on the Donor’s behalf once the Donor revokes the authority.

For example, Ali decided to draft a POA and has named Siti to be his Donee. Through his POA, he assigned certain rights over his land to Siti (ie: now Siti can sign any transfer of land and/or deal with the land on Ali’s behalf). However, few years later, Ali decided to revoke his POA without Siti’s consent. Since Ali drafted a revocable POA, Siti has to accept Ali’s decision and now Siti can no longer acted on behalf of Ali.

In Malaysia, revocable POA can be revoked under the following situations: –

• Revocation by the Donor/Donee;
• The Donor/Donee has passed away;
• The Donor/Donee becomes unsound mind;
• The Donor/Donee has been adjudged unsound mind; or
• The Donor has become bankrupt.

2. Irrevocable Power of Attorney

Whereas, an irrevocable POA means the Donor cannot simply rescind/revoke the POA at any time and without the consent of the Donee. This means, the Donor has waives/gives up his or her rights to rescind/revoke the POA in relation to the specified subject matter for which the powers were granted for. In simple words, the termination of the irrevocable POA is only possible with the Donee’s consent. It will not revoke by death, unsound mind or bankruptcy of the Donor.

For example, Ali has drafted a POA where he gave authority to Siti to deal with his land under the irrevocable POA, and for whatever reason it might be, Ali cannot revoke the POA without the consent of Siti.

Furthermore, POA can only be irrevocable if the document includes a provision/clause which exactly says that the Donor gives up the rights of revocation or indicates that the power of POA is irrevocable.

Advantages and Disadvantages of POA

It is advisable to review the following before executing a POA:

Three Key Advantages of having a POA: –

1. Convenience is the most significance factor of having a POA as the POA acts on your behalf to handle your affairs without your presence;
2. A POA can assist you when you are no longer have the competence to handle your own affairs; and
3. It can help to prevent delays. A properly drafted POA provides your Donee with a quick access to your assets. This is essential so that your Donee can continue to make payments and/or handle your finances/affairs if you become incompetent and unable to act on your own behalf.

Three Key Disadvantages of having a POA: –

1. The Donee may act in ways or do things that the Donor had not intended;
2. There is no direct supervision of the Donee’s activities except the Donor. This may lead to financial abuse/fraud; and
3. Even though a POA is legally enforceable, certain banks or any third party may demand a specific or additional information before recognizing your Donee. Therefore, if your POA does not meet/comply certain internal regulations of the banks, the banks may refuse to recognize your Donee.

Key terms:

Donor: A person who creates the POA

Donee: A person who acquires certain power as stated in the POA

Irrevocable: Unable to cancel

Revocable: Able to cancel

Unsound mind: Mentally ill and/or a person incapable of managing himself or his affairs