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Power of Attorney: What It Means

Entrusting someone with power of attorney (POA) can help ensure your wishes are met if you can’t communicate. Learn more.

In a broad sense, estate planning is about safeguarding your assets and your best interests when you’re no longer able. We often think about this as taking place when we pass away. But it’s also vital to have someone who can make decisions and take care of your priorities if something incapacitates you during your lifetime. This is where power of attorney (POA) comes in.

Unfortunately, life is full of scenarios that can affect our ability to make decisions, including important financial or medical ones. For this reason, setting up a POA document can be a major piece of any estate plan. And it’s often best to do this at a younger age to ensure you’re ready for unforeseen circumstances.

This article will explain how power of attorney works and what it means when someone carries this role. We’ll also cover the different types of POA and answer some frequently asked questions.

What Is Power of Attorney (POA)?

In simplest terms, power of attorney is a document that allows someone, or multiple people, to make both legal and financial decisions on your behalf. It takes place if you’re no longer capable of making these decisions yourself, such as in a medical emergency or with declining health due to old age.

A person with power of attorney is known as an attorney-in-fact or agent. This role carries immense responsibility, as these individuals undertake significant authority over the most important aspects of your life. Therefore, they must act with a fiduciary duty to act in your best interest and follow any instructions within the POA document.

It’s a common requirement, according to the American Bar Association (ABA), for agents to display the POA document when they need to use their power. For example, if you’ve been hospitalized and can’t communicate, a designated agent must show the physical document to the doctors before their decisions on your medical care can be valid.

Attorneys-in-fact must adhere to state law. However, it’s important to note that these regulations tend to vary. So, it’s wise to consult with an attorney or advisor in your state to better understand the laws you or your designated agents need to follow.

What Does Someone with POA Do?

Individuals who carry power of attorney have the authority to handle a range of tasks and responsibilities. But they must do so with your best interest as their top priority, and only act in ways specified in the document you and they signed. Here are some typical examples of duties those with POA may carry out.

  • Handle financial affairs (paying bills and taxes, managing bank accounts, etc.).
  • Make legal decisions.
  • Conduct real estate transactions.
  • Transfer titles and ownership of vehicles, real estate, or other assets.
  • Manage your business.
  • Gifting management.
  • Oversee your investment portfolio.
  • Access and manage digital accounts, including social media.
  • Make healthcare decisions on your behalf.
  • Put business succession plans into motion.

Keep in mind that there may be limitations on the activities attorneys-in-fact can perform, both by state regulations and by individual organizations, such as banks. For example, on its website, Bank of America says, depending on the circumstance, that it could implement transaction limits for POA agents.

Why It’s Important

Setting up power of attorney is one of the most important steps when planning your estate. Doing so eliminates confusion about who should run things when decisions need to be made quickly. In a lot of cases, this confusion can lead to conflict or flurries of opinions from individuals on the best course of action. A POA document firmly establishes decision-makers, which can reduce tensions.

It’s also a way to ensure that the people you trust most are the ones taking the wheel on your behalf. For many people, this is a spouse, but it could also be a sibling, child, or close friend.

Perhaps the most vital reason to put POA in place is that you’ll never know when you might need it. That’s why it’s key to have the paperwork drawn up and signed well before you’re unable. The truth is that life is full of uncertainty, and it’s nice to know you have someone to act as a safety net if you can’t speak up for yourself.

Choosing an Attorney-in-Fact

Choosing someone to entrust power of attorney with is an important choice that requires plenty of care and thought. Above all else, you’ll have to make sure it’s someone you trust since they’ll have the agency to make important decisions for you. As noted, this could be a spouse, parent, child, or any other person you feel comfortable giving the power to act for you.

There aren’t any qualifications or requirements for someone to be an attorney-in-fact, other than being over 18 years old. The most important factor is trust and a strong willingness to be your representative. However, it’s also generally a good idea to appoint someone you think is up to the job, especially if they’re managing finance or more complex situations. You can assign a legal professional as an agent, but this isn’t required.

You can designate multiple attorneys-in-fact. In some cases, this can be advantageous if your first choice is unavailable, either due to being incapacitated themselves or some other reason. But it can also lead to tense situations, such as agent disagreements. So, if you decide to have more than one agent, you’ll need to specify if there needs to be a unanimous vote to make decisions, as well as figure out what happens if every agent isn’t present.

Types of Power of Attorney

There are several main types of power of attorney relevant to estate planning. Below is a list of them with brief descriptions of each:


This type of POA grants broad powers to your agent to handle various financial, legal, or medical situations for you. It takes effect immediately and is in place until you revoke it or become incapacitated.


Much like a general POA, a durable one continues when something, such as a medical emergency, forces you to be unable to make decisions or communicate with others. Also like general ones, these enable agents to take care of various legal and financial matters on your behalf.


Non-durable POAs are temporary agreements that end once a certain specified task has been completed or upon your incapacitation. According to the ABA, an example of this may be a real estate agent closing the sale of your house.


Like a non-durable POA, a limited one allows an agent to have temporary authority to enact decisions on your behalf. Under this agreement, there’s typically a specific period and clear stipulations about decisions the attorney-in-fact would make. For instance, if you’d like to sell a car, you can grant someone a limited power of attorney to cover all the responsibilities that go along with the process. But, after the sale is complete, the powers end.


A springing power of attorney takes effect only when you become incapacitated, often due to a permanent or temporary physical or mental disability. This means that, until something debilitating occurs, the POA document remains inactive. Think of it as something that jumps into action, but only when you need someone to make decisions on your behalf.


A financial POA document grants a person the ability to handle specific financial affairs for you if you’re unable. Examples may include managing bank accounts, retirement accounts, and paying taxes. These can be either durable, non-durable, or limited.

Health Care

Also known as a health care proxy, a health care POA is where you name someone to make decisions about your medical care. These are important in estate planning and are often durable, as the involvement of another person becomes especially important when you can no longer speak for yourself. If you, say, had to be comatose after surgery, this would allow a trusted individual to be in your corner and carry out your wishes.

Frequently Asked Questions

Does a power of attorney need to be notarized?

Many states require the notarization of powers of attorney. This can often be a good thing, though. Having a witness there while signing your power of attorney documents helps certify that both you and your designated agents were of sound mind and that there are no issues with the validation or authenticity of the agreement. But whether you’ll need to will depend on your state’s regulations.

How long is a power of attorney good for?

This can vary based on the type you go with. A durable POA, for instance, stays in force when you become incapacitated. On the other hand, general ones end when you become incapacitated. Others, like limited and non-durable ones, only last for a specific period.

What is the best form of power of attorney?

The best type of power of attorney to choose relies on what you’d like to accomplish or plan for. In the context of estate planning, a durable POA would make sense since it allows an individual to take care of your affairs when you can’t. In the end, though, we recommend talking to an estate planner or financial advisor. They can help you decide which is best for you and how it fits into your plans.

Does someone with power of attorney carry a fiduciary duty?

People with POA have a legal responsibility to be a fiduciary. This means that in any action that concerns you, they must think of you first and stay within the bounds of the instructions within the document.