1.2.1.4 Entities Authorized to Transact Business in the Account
A power of attorney is a legal document that authorizes one party to act as agent for another (the grantor or principal) and make legally binding decisions on the grantor’s behalf. The agent, also called an attorney-in-fact, has a fiduciary duty to the grantor.
Powers of attorney are written for a variety of purposes and can be either general or limited in scope. With a general power of attorney, the agent is given broad authority to manage the grantor’s assets and financial affairs. A limited power of attorney grants only specific activities to the agent, such as the power to sell a particular property. These generally become effective immediately upon execution by the principal and terminate at some fixed date or when the principal becomes incompetent, though the principal can revoke the power of attorney at any time. A durable power of attorney differs from a traditional power of attorney in that it remains in operation even after the incapacity of the principal. A durable power of attorney may take effect as soon as it is executed or it may not become operative until the principal’s disability. A durable power of attorney may be drafted to permit either general or limited responsibilities.
Power of attorney does not take away the rights of the grantor. Nor does a power of attorney affect the legal status of the grantor’s assets or of an estate. A power of attorney ceases upon the death of the grantor.
Trade authorization is the power that an account owner grants to some designated person to access his trading account. It may be granted to any trusted person, including a spouse, agent, or broker. Often used when a customer does not know much about investing, trade authorization gives the agent power to buy and sell securities or make inquiries concerning the owner’s account. In effect, the account owner gives the designa