Future Business Leaders of America (FBLA) Agribusiness Practice Test

What does a Power of Attorney establish?

1. A legal guardian for minor children

2. Authority for one person to act on behalf of another

3. Terms for managing a trust

4. Instructions for funeral arrangements

The correct answer is: Authority for one person to act on behalf of another

A Power of Attorney is a legal document that grants one person the authority to act on behalf of another person in specific legal or financial matters. This arrangement allows the designated individual, known as the agent or attorney-in-fact, to make decisions and take actions on behalf of the principal, who is the person granting this power. Such powers can be broad or limited based on the terms specified in the document. This document is crucial in situations where the principal is unable to manage their affairs due to absence, illness, or incapacity, thus ensuring that someone trusted can handle important decisions and tasks. Other options, while related to legal matters, do not align with the function of a Power of Attorney. For example, establishing a legal guardian for minors pertains to custody issues, whereas managing a trust involves the fiduciary responsibilities of overseeing assets and distributions, and instructions for funeral arrangements involve pre-arranged decisions regarding end-of-life services. Each of these represents a different area of legal authority or responsibility, distinct from the role and purpose of a Power of Attorney.