Describe the term "power of attorney."

The term "power of attorney" refers to a legal document that grants one person the authority to act on behalf of another in legal or financial matters. This arrangement is essential for situations where the individual may be unable to manage their affairs due to absence, incapacity, or other reasons. The person who creates the power of attorney is known as the principal, and the person designated to act on their behalf is called the agent or attorney-in-fact.

This document can involve a broad range of powers, including managing bank accounts, signing contracts, dealing with real estate transactions, and making financial decisions. It can be tailored to be effective immediately or to come into effect upon specific conditions, such as the principal's incapacitation. The clarity and specificity of powers bestowed through a power of attorney are critical to ensuring that the agent acts in the best interests of the principal.

In contrast, options related to medical decisions, bankruptcy, or estate distribution serve different functions and do not encapsulate the full scope of authority conferred by a power of attorney in legal and financial contexts.