Power of Attorney

Key takeaways

• A power of attorney (POA) is a legal document that lets one person (the agent or attorney-in-fact) act on behalf of another (the principal).
• POAs can cover financial, legal, and medical decisions and may be broad or narrowly limited.
• A durable POA remains effective if the principal becomes incapacitated; a springing POA takes effect only upon a specified event (often incapacity).
• Choose an agent who is trustworthy and capable; consider safeguards like limited powers, joint agents, and reporting requirements.

What is a power of attorney?

A power of attorney is a written authorization that gives someone legal authority to make decisions or take actions for you. The scope and timing of that authority are determined by the language in the document and by state law.

How a POA works

• The principal creates the POA while mentally competent and specifies the powers granted.
• Both principal and agent must sign; most states require a notary and sometimes witnesses.
• A non-durable POA usually ends if the principal becomes incapacitated. A durable POA explicitly remains effective after incapacity (but terminates at death).
• A POA can be revoked by the principal while competent, or it may end by its own terms, by court order, or at the principal’s death.

Common types of POA

Health care (health care proxy)

Also called a health care power of attorney; authorizes an agent to make medical decisions for the principal if they cannot do so themselves. This can include treatment choices, consenting to procedures, and end-of-life care decisions as specified in the document.

Financial POA

Authorizes an agent to manage financial matters such as paying bills, accessing bank accounts, filing taxes, collecting benefits, and managing investments. Financial POAs may take several forms:

• General POA — broad authority to act in many financial and legal matters (as permitted by state law).
• Limited (special) POA — authority restricted to specific tasks, assets, or time periods.
• Durable POA — remains in effect after the principal becomes incapacitated.
• Springing POA — becomes effective only after a defined triggering event (commonly the principal’s incapacity); it must be carefully worded to avoid disputes.

Fast fact: An agent need not be an attorney — it can be any competent adult you trust.

How to set up a POA

1. Decide what powers you want to grant and whether the POA should be durable or springing.
2. Use a form or draft a document that complies with your state’s legal requirements; consider an attorney for complex situations.
3. Put the POA in writing (oral POAs are unreliable).
4. Sign with required witnesses and notarization per state rules.
5. File or record the POA if local law requires it (common for real estate transfers or guardianship-related POAs).
6. Give copies to your agent, alternates, and relevant institutions (banks, health providers). Keep a record where trusted family members can find it.

Note: Certain powers—such as making or revoking a will, or marrying on someone’s behalf—are generally not delegable.

Choosing an agent

• Pick someone trustworthy, capable, and willing to follow your wishes. Options include a spouse, adult child, other relative, friend, or professional (attorney, accountant).
• You can name multiple agents to act jointly or separately. Joint authority can prevent unilateral abuses but may create gridlock if agents disagree.
• Consider dividing responsibilities with limited POAs (e.g., one agent handles investments, another pays routine bills) to match skills and availability.

Risks and safeguards

Risks include misuse of funds, self-dealing, or poor decision-making. Mitigation strategies:
* Limit powers to what’s necessary.
* Require periodic reporting to a third party (trusted lawyer, accountant, or family member).
* Name successor agents and specify rules for major transactions (e.g., require two agents to agree before selling real estate).
* Review and update POAs after major life changes (marriage, divorce, death, relocation).
* Revoke an old POA in writing and notify institutions that relied on it when you change agents.

If no POA exists and you become incapacitated, a court may appoint a conservator or guardian — a slower, often costly process that can be contested.

Common questions

Q: Can an agent do anything they want?
A: No. The agent must act within the authority granted by the POA and has a fiduciary duty to act in the principal’s best interest.

Q: Can next of kin override a POA?
A: No. Only the principal (while competent) or a court can revoke or invalidate a valid POA. Family members may petition a court if they believe the agent is abusing authority.

Q: How do I revoke a POA?
A: Revoke in writing while competent, notify the agent and third parties, and follow any state-specific requirements (notarization or filing). Create a new POA if needed.

Q: Who can be an agent?
A: Any competent adult chosen freely by the principal. Professionals may charge fees; family members may be less costly but could create emotional conflicts.

Bottom line

A thoughtfully drafted power of attorney is a vital tool for protecting your financial affairs and medical wishes if you become unable to act. Create a POA while you are competent, choose agents carefully, specify limits and safeguards, and keep the document updated so it will work as intended when needed.