What Is a Letter of Proxy?

What Is a Letter of Proxy?
Image Credit: apichon_tee/iStock/GettyImages

Tip

A letter of proxy is a legal document that gives someone authority to act on behalf of another.

In legal terms, a proxy is someone who has the power to act on another person's behalf for a specific purpose. The document that establishes a proxy relationship is referred to as a letter of proxy. A proxy letter for business is commonly used to allow a stockholder to appoint someone else to vote for them in a stockholders meeting. A letter of proxy may also be used to appoint someone to make health care decisions for another person. Legal experts recommend caution when signing a letter of proxy since it delegates a great deal of control.

Proxy Letter for Business

Anyone who owns stock in a corporation has the right to participate in shareholder meetings. Those who can't make meetings or choose not to attend can protect their voting rights by designating a representative to attend and vote on their behalf. The type of proxy letter used to appoint this representative is known as a corporate proxy or shareholder proxy.

A corporate proxy is a legal document that serves as a special power of attorney under a well-defined set of circumstances. It usually lasts for a limited period of time. The standard corporate proxy letter format includes the dates when the proxy will be in effect, the name of the corporation and the names of the stockholder and proxy. The letter can also contain details like how the proxy should vote on specified issues. In order to be binding, the corporate proxy letter must be signed by both parties and witnessed.

Health Care Proxy Letter

A health care proxy letter is a document that gives someone the health care power of attorney for another person, often a relative. A health care proxy can be authorized to make all kinds of health decisions in situations where someone is unable to make them for themselves. The limits of the health care power of attorney are spelled out in the health care proxy document, which is also known as a durable power of attorney for healthcare. This power of attorney is different from a financial power of attorney that would be used for someone who is unable to handle their finances.

Senior citizens are frequently the subjects of health care proxy letters. AARP, the American Association of Retired Persons, recommends selecting a health care proxy based on their ability to follow directives regardless of personal feelings. This may include the decision to refuse life-prolonging treatment in certain situations. In many states, the health care proxy letter is combined with a living will that describes the end-of-life treatment a person wants if they are unable to communicate their wishes. Hospitals, assisted living facilities and health care providers typically require a health care proxy letter to be witnessed and notarized.

Letter of Proxy vs. Authorization Letter

An authorization letter is a less formal document than a proxy that gives someone the ability to act on another person's behalf in a very limited capacity. For example, parents who are leaving town for a few days might write an authorization letter that spells out what their childcare provider is allowed to do, such as making medical decisions in case of emergency. The authority granted in this type of letter is typically temporary and limited.

The most important information to include in an authorization letter is the name of the person who is being authorized, the reason for the authorization and details about what is being permitted and for how long. With an authorization letter, the actions of the person who is serving as a proxy are binding by law. Different states have different laws about whether an authorization letter needs to be witnessed or notarized.

references