A durable power of attorney is one of the most powerful legal documents you can create — and one of the least understood. Here's everything you need to know.
What Is a Power of Attorney?
A power of attorney (POA) is a legal document that authorizes someone else — your "agent" or "attorney-in-fact" — to act on your behalf in financial and legal matters.
A durable power of attorney remains effective even if you become incapacitated. A regular power of attorney terminates upon incapacity — which is precisely when you need it most.
Types of Power of Attorney
General Durable POA: Broad authority over financial matters — banking, investments, real estate, taxes, and more.
Limited POA: Authority for a specific transaction or time period.
Springing POA: Only takes effect upon a specific event, such as incapacity (requires a doctor's certification).
Choosing Your Agent
Your agent has enormous power. Choose someone who is:
What Your Agent Can (and Cannot) Do
A POA agent can manage your finances, pay bills, file taxes, and manage investments. They generally cannot:
Healthcare POA vs. Financial POA
These are separate documents. A healthcare POA (or healthcare proxy) authorizes someone to make medical decisions. A financial POA covers financial and legal matters. You need both.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Estate planning laws vary by state. Please consult a licensed estate planning attorney for advice specific to your situation.