What is a power of attorney (POA)?

A power of attorney, or POA, is a legal document that lets you grant another person the authority to make financial and/or medical decisions on your behalf. This person is called your agent, proxy, or attorney-in-fact.

When used for estate planning, most POAs are set up to be used in the event you’re incapacitated and can’t communicate your wishes or act for yourself. Simply put, a POA allows your agent to manage your affairs when you’re not able to.

Why do I need a power of attorney?

Anyone can become seriously ill or injured unexpectedly. If this happens to you, it may become difficult to manage your everyday affairs, like paying bills and agreeing to (or declining) medical treatment. If you don’t have a POA, your loved ones have to ask the court for permission to act on your behalf. This can take a while and be stressful. And sometimes the person the court puts in charge doesn’t know your wishes, or isn’t the person you would have chosen yourself.

By establishing a POA before you need it, you can plan ahead and ensure that someone you trust has the power to act on your behalf when you can’t.

What are the types of power of attorney, and what can they do?

There are several types of POAs. Each one gives your agent distinct powers and allows them to use those powers in different circumstances.

General power of attorney

A general power of attorney authorizes your agent to act for you in all situations allowed by local law, including legal, financial, health, and business matters. A general POA gives your agent considerable decision rights over your affairs, but there are still some things they can’t do. For example, they can’t enter into a marriage on your behalf, or make changes to your last will and testament.

Special or limited power of attorney

A “special” or “limited” power of attorney gives your agent authority to act on your behalf only in certain areas. Within these areas, you can choose the specific powers you want your agent to receive.

Two types of limited POAs commonly used in estate planning are:

• Financial power of attorney: This POA lets your agent make decisions about your money and property. For example, your agent could pay your bills, make bank deposits, collect your retirement benefits, and sell or rent your real estate.
• Medical power of attorney: A medical POA (also called a healthcare POA) lets your agent make important healthcare decisions on your behalf. These decisions could be about your treatment options, medication, surgery, end-of-life care, and more. Without a medical POA, your loved ones could be left trying to guess what kind of care you want to receive. There’s also a possibility you’d receive different care than you would’ve chosen for yourself.

Springing power of attorney

Once you execute a traditional POA, it’s effective immediately, and your agent can start exercising the powers you granted them right away. A springing POA, on the other hand, only gives your agent the power to act when a specified condition is met — for example, if you’ve become incapacitated and can’t act for yourself. Once the condition is met, your agent’s power “springs” into effect. Until then, your agent has no legal authority, and you are the only one with control over your affairs.

Most attorneys don’t recommend using springing POAs for estate-planning purposes. This is because the process of determining whether you’re incapacitated isn’t always straightforward. A non-springing POA avoids these issues, and you can instruct your agent to only use their powers if you’re incapacitated.

Durable power of attorney

Your POA can control when your agent’s powers come into effect, and it can also control when they end. Having a durable power of attorney means that your agent’s authority to act on your behalf will continue even if you become incapacitated. If you’re using your POA for estate planning, it’s typical for it to be durable, because you’re planning for a situation where you might not be able to make decisions on your own.

With a non-durable POA, your agent’s power to act ends if you become incapacitated. Non-durable POAs aren’t useful for estate planning, but they can be useful in other scenarios. For example, you might grant your stock broker a non-durable POA so they can manage your investments day-to-day.

If I have a general POA, do I need to create a financial or medical POA?

This depends on your state’s laws. In some states, a general POA can cover both financial and medical decisions, so you don’t need to create and manage multiple documents. Other states require that the power to make healthcare decisions be granted in a separate medical POA. Be sure to review your state’s laws so you understand the POA requirements where you live.

Regardless, if you want to name one agent to oversee your financial affairs and a different agent to oversee medical decisions, you’ll want to create both a financial and a medical POA.

If I have a will, do I need a POA?

Yes, estate planning experts agree that you should have both a will and a POA. They accomplish different things. Your last will and testament explains how you want your property distributed after you die. Your POA covers important decisions that have to be made during your lifetime in the event you become ill or injured.

How to make a power of attorney

Here are the basic steps to make your power of attorney:

1. Decide which type of power of attorney to make. The right fit for you will depend on your situation and preferences.
2. Decide who you want to be your agent. Your agent will have a lot of authority, so you should choose someone you trust to act in your best interest. It’s a good idea to speak to this person beforehand and make sure they’re willing to serve as your agent.
3. Decide what authority you want to give your agent. What financial and medical decisions do you want them to be responsible for managing on your behalf?
4. Get a power of attorney form. Most states provide blank POA forms for free, but they aren’t always easy to tailor to your needs. You can also use free online software to create a durable financial power of attorney, or a living will (which includes a healthcare power of attorney).
5. Complete the form, and sign and witness it according to the laws in your state. In most states, you’re required to sign your POA form in front of a notary. Some states also require additional witnesses, or the signature of your agent.
6. Give a copy of your POA form to your agent and other interested parties, like your bank and medical office.
7. Keep your POA forms in a safe place with your other estate-planning documents. This could be in a fireproof safe in your home, a safe deposit box, or at a trusted attorney’s office.
8. Keep your POA updated as your circumstances change.

You aren’t required to use a lawyer to create your POA. However, you may find it useful to consult with one to make sure your POA covers all your needs.

Who can act as power of attorney?

In most states, the only requirements for a POA agent is that they must be of sound mind and at least 18 years old. Since your POA holds a lot of authority, it’s a good idea to choose someone competent and trustworthy, who has your best interests at heart.

When does power of attorney end?

This will depend on the type of POA you have created.

• If you have a non-durable POA, your agent’s authority will end when you become incapacitated.
• If you have a durable POA, your agent’s authority will end when you pass away. At this point, the authority to manage your estate’s affairs and assets is given to the executor of your probate estate. (You can use your will to choose an executor.)
• Your POA will also end if you revoke it. You have the right to revoke your POA at any time, as long as you’re of sound mind. You should do this in writing. Revoking your POA terminates your agent’s authority.
• Additionally, your agent could resign, forfeiting the authority you granted them under your POA. If your spouse is your agent, their authority will end if either of you file for divorce or legal separation, unless your POA explicitly states otherwise.

How to change or revoke a power of attorney

You can revoke your power of attorney at any time, as long as you’re mentally capable of doing so. To revoke your POA, either:

• Fill out a revocation of power of attorney form, and have it witnessed and notarized like a POA. This document indicates that you no longer want your chosen agent to act as your POA.
• Create a new power of attorney document that specifically states it revokes your previous POA. You can then use your new POA to name a new agent, or change your current agent’s responsibilities.

Once you’ve created either of these documents, you should notify your original agent in writing to let them know you’re revoking their power of attorney. You should also reach out to third parties who have your POA on file, like banks and medical offices, to let them know about the revocation. And if your POA is on file with any agencies, like the county clerk’s office, you should provide them a copy of the revocation as well.

There’s no way to change or “edit” a power of attorney. If you want to make changes, you should create an entirely new POA document and revoke the old one.

Who can override a power of attorney?

If you’re of sound mind, you can always override your own POA by revoking it. In addition, people close to you — like your relatives — could try to override your POA if they think your agent is exploiting you. For example, they might think your agent isn’t acting in your best interest.

To do this, your loved ones would first bring their concerns to you, if you were of sound mind, and ask you to remove your agent. If you’re incapacitated, your loved ones would instead approach your agent and ask them to step down from their position as your POA. If your agent refuses, then your loved ones could take the issue to court, likely with a lawyer’s help. They would have to prove your agent wasn’t acting in your best interests or following the instructions outlined in your POA.

Overriding power of attorney for an incapacitated person can be a difficult process, and it’s usually a good idea to hire a lawyer to help.

A power of attorney creates peace of mind

Planning for a situation where you would need a power of attorney can feel uncomfortable for some. But by planning ahead and being prepared, you can be sure your healthcare and financial wishes are in the hands of someone you trust completely. And knowing what you want can be a relief for your loved ones, allowing them to make important decisions with confidence.