What Is a Power of Attorney?
A power of attorney is a legal document in which you (the principal) authorize someone you trust (the agent) to act for you, usually in financial and legal matters. A durable power of attorney stays effective if you become incapacitated, which avoids a court guardianship. Many states use the Uniform Power of Attorney Act and require notarization. Health care decisions are usually covered by a separate health care power of attorney.
A power of attorney (POA) is one of the most important planning documents, because it lets someone you choose handle your affairs if you cannot (Cornell LII).
Types of powers of attorney
| Type | What it does |
|---|---|
| General | Broad authority over financial and legal matters |
| Limited (special) | Authority for a specific task, such as selling a house |
| Durable | Remains effective if you become incapacitated (Cornell LII) |
| Springing | Takes effect only upon a future event, usually incapacity, often requiring a doctor's certification |
| Health care POA (health care proxy) | Authorizes an agent to make medical decisions when you cannot |
Without a durable POA, family members may need to go to court for a conservatorship or guardianship to manage your affairs.
How to make one
- Use your state's statutory form or a lawyer-drafted document.
- Sign while you have capacity.
- Follow signing rules: many states require notarization, and some require witnesses.
- Give copies to your agent and financial institutions as needed.
- Real estate transactions may require recording the POA.
Do you need a lawyer?
Not always. Many states publish free statutory forms. A lawyer is helpful if you want specific powers, such as making gifts, changing beneficiaries, or creating trusts, which often must be granted expressly; if you own a business; or if there are family conflicts.
Agent duties
Agents must act in the principal's best interest, keep the principal's money separate, keep records, and avoid conflicts of interest. The CFPB publishes free guides for agents managing someone else's money. Agents who misuse funds can be held liable and may face criminal charges for financial exploitation.
After signing
- Banks may ask for their own forms or a certification; many states require them to accept valid statutory POAs.
- A POA ends at the principal's death; then the executor takes over.
- You can revoke a POA while you have capacity, in writing, and should notify the agent and institutions.
Pairing documents
Combine a financial POA with a health care POA and a living will. Our estate planning documents checklist lists the core documents.
An estate planning lawyer can draft documents that fit your state's requirements.
Sources
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This article is general legal information, not legal advice, and reading it does not create an attorney-client relationship. Laws differ by state and change over time; talk to a licensed attorney in your state about your situation.