As an NRI, it is not practical to visit India every time you want to do a transaction or sign a contract. Thanks to the PoA or Power of Attorney provision, you don’t have to!
In this article, we will discuss everything you need to know about the Power of Attorney (PoA) as an NRI. We will discuss aspects like:
Power of Attorney or PoA is a legal document that allows you to transfer powers to an individual to act on your behalf.
In this legal provision, you are referred to as the ‘principal’ whereas the person who you transfer powers to is referred to as the ‘PoA agent.’
PoA is a useful legal provision which can make transacting or performing acts that are not possible for an individual for several reasons.
NRIs can use it because they are not always present in India. Older people may use it because their mobility might be limited.
However, transferring critical powers to your PoA agent could backfire. Towards the end of this article, we have discussed some legal remedies in case your PoA agent misuses the PoA.
There are primarily 3 types of Power of Attorney:
Let’s look at what each of these mean.
Special Power of Attorney or SPoA is used to transfer specific or limited powers to the PoA agent.
SPoA is generally used in matters of real estate and property. This means your SPoA agent can specifically conduct transactions related to real estate and property.
SPoA expires the moment your PoA agent has completed the transaction specified in the PoA document.
SPoA can be very useful for NRIs to bestow powers upon a trustworthy PoA agent in India to complete specific transactions/deals/acts on the NRI’s behalf.
General Power of Attorney or GPoA has a much wider scope than SPoA.
A GPoA agent can basically replace you in different types of transactions/deals and acts ranging from paying taxes to appearing in courts.
GPoA expires when the principal becomes mentally incapacitated or unfit to make decisions.
GPoA is extensively used by old people with limited mobility as it helps them to conduct crucial transactions/deals/acts through a trustworthy PoA agent.
Durable Power of Attorney or DPoA gives powers to your PoA agent to represent you or replace you for all types of transactions/deals/acts.
The only difference between GPoA and DPoA is that while GPoA expires when the principal becomes mentally incapacitated, DPoA is in effect as long as the principal is alive (no matter the health condition).
DPoA can be very useful if the principal wants a loved one (appointed as the PoA agent) to take medical decisions on their behalf because the principal is unfit to do so.
Note: All the types of PoA discussed above become ineffective at the moment of death of either the principal or PoA agent.
The good part about the PoA execution process is that you (the NRI principal) need not be present in India to execute the PoA. But that doesn’t mean the process is online.
Executing Power of Attorney as an NRI involves the following steps:
While the legal professional will help you execute a Power of Attorney successfully, here are some tips to execute a Power of Attorney that doesn’t backfire.
This cannot be stressed enough. If you choose your PoA agent carefully, 99% of your work is done.
As the principal, the onus of drafting a tight Power of Attorney falls on you. Let a legal professional draft it for you but you must read it and play the devil’s advocate.
Try to find gaps that can be potentially abused if your PoA agent goes rogue and ask the legal professional to fill them.
You should be vigilant about what your PoA agent is doing on your behalf. If you become suspicious of their intentions or realise they are doing things that you didn’t ask them to do, immediately revoke the PoA.
Despite doing everything right, it may happen that your PoA agent misuses the Power of Attorney. Let’s look at your options in case this happens.
This is definitely not an ideal situation to be in. Not only will you lose a trustworthy family member/friend but may also have to bear a financial loss.
However, you can sue your PoA agent if they misuse the Power of Attorney. You can even take proactive steps to stop them from misusing the Power of Attorney if you suspect they will do so.
Disclaimer: This article should be considered as legal advice. It serves the purpose of introducing you to various aspects of PoA. You should seek the services of a legal professional to understand the nuances of PoA better and execution of PoA.