What term describes a document that verifies an individual's identity and authority to act on behalf of another?

The term that describes a document verifying an individual's identity and authority to act on behalf of another is indeed a power of attorney. This legal instrument allows one person, referred to as the principal, to designate another person, known as the agent or attorney-in-fact, to make decisions or perform specific actions on their behalf.

This document is particularly critical in scenarios where the principal is unable to make decisions due to incapacity, absence, or when they prefer to delegate authority in financial, legal, or healthcare matters. The power of attorney can be tailored to different situations, enabling broad or limited powers, thus providing a tailored approach to representing the principal’s interests.

Understanding this term is vital in the context of estate planning and legal proceedings, where the authority granted to an agent can influence decisions significantly. It's important to note that while a proxy may sound similar, it typically refers to an individual empowered to act on behalf of another in a specific context, such as voting at a shareholder meeting, rather than serving as an overarching legal authority like a power of attorney.