Structure and requirements
The person who creates a power of attorney, known as the grantor, can only do so when he/she has the requisite mental capacity. Suppose the grantor loses capacity to grant permission after the power of attorney has been created (for example, from Alzheimer's disease or a head injury in a car crash); then the power will probably no longer be effective. In some powers of attorney the grantor states that he/she wishes the document to remain in effect even after he/she becomes incapacitated. This type of power is commonly referred to as a durable power of attorney. If someone is already incapacitated, it is not possible for that person to execute a valid power. If a person does not have the capacity to execute a power of attorney (and does not already have a durable power in place), often the only way for another party to act on their behalf is to have a court impose a conservatorship or a guardianship.
Depending on the jurisdiction, a power of attorney may be oral and, whether witnessed, will hold up in court, the same as if it were in writing. For some purposes, the law requires a power of attorney to be in writing. Many institutions, such as hospitals, banks and, in the United States, the Internal Revenue Service, require a power of attorney to be in writing before they will honor it, and they will usually keep a duplicate original or a copy for their records. Nursing homes often follow the same practice.
The equal dignity rule is a principle of law that requires an authorization for someone performing certain acts for another person to have been appointed with the same formality as required for the act the representative is going to perform. This means, for example, that if a principal authorizes someone to sell the principal's house or other real property, and the law requires a contract for the sale of real property to be in writing (which is required under the Statute of Frauds in most U.S. jurisdictions), then the authorization for the other person to sign the sales contract and deed must be in writing too. Likewise, in common-law jurisdictions other than the U.S., a power of an attorney to execute a deed (i.e. instrument under seal or executed in presence of two witnesses) must be itself executed as a deed.
In order for a power of attorney to be a legal document it must be signed and dated at a minimum by the principal. This alone, however, is not usually considered sufficient if the legality of the document is ever challenged by a third party. Having the document reviewed and signed (and often stamped) by a notary public increases the likelihood of withstanding such a challenge. However, such notarization is not always necessary for such a document to be considered legal.
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