financial power of attorney
Also called: surat kuasa
A document that authorizes a family member to manage accounts or transactions.
What it means
A financial power of attorney is the granting of authority from one person to another to manage their financial affairs, such as withdrawing funds, paying bills, or managing accounts. The grant of authority is usually made in writing and states the limits of authority clearly. In families, financial power of attorney is often given to a trusted member when someone is ill or out of town.
Why it matters for families
A financial power of attorney makes urgent matters easier, but it also opens the risk of misuse if the limits are unclear. Without detailed authority, the holder can make decisions the grantor did not intend. Therefore, state the purpose, the nominal limit, and the period of validity.
Example
A mother who is hospitalized gives her child power of attorney to pay routine bills from her account. The letter of authority states the types of bills and the monthly nominal limit. The child records every payment and reports it to the mother.
Common misunderstanding
Many think a letter of authority gives the right to own that money. In fact, the authority is only to manage within the limits given.