What is a power of attorney, and do I need one?
Wills and estate · 3 minute read
A power of attorney lets someone you choose act for you while you are alive. Without one, a family member may have to go to court to do things as ordinary as paying your bills.
What it is
A power of attorney is a document in which you (the principal) give another person (the agent, sometimes called attorney-in-fact) authority to act on your behalf. It has nothing to do with hiring a lawyer, despite the name.
It operates while you are alive and ends at death, which is the opposite of a will.
The main varieties
A financial power of attorney covers money matters — banking, bills, property, taxes. A healthcare power of attorney, sometimes combined with a living will as an advance directive, covers medical decisions if you cannot make them yourself.
A durable power of attorney stays effective if you become incapacitated. A springing one only starts at that point. Which is appropriate depends on your situation and your state's rules.
What happens without one
If you become unable to manage your affairs and nobody has authority, the usual route is a court guardianship or conservatorship. That means a petition, a hearing, fees, and ongoing reporting to a court.
Families discover this at the worst possible time, typically after a stroke, an accident or a diagnosis. The document that would have prevented it takes far less effort than the court process that replaces it.
Choosing who
Trust is the whole thing. A financial agent can generally do anything with your money that you could do. Choose someone honest, organised and willing, and tell them where the document is.
Name a backup. The most carefully chosen agent can be unavailable, unwell or unwilling when the moment arrives.
Limits and safeguards
You can limit the power to specific acts or a specific time period — a common use is authorising someone to sign for a property closing while you are away.
You can revoke it while you have capacity. Banks sometimes refuse older documents or insist on their own forms, so it is worth checking with your institutions rather than assuming.
Where it fits
Most basic estate plans are three documents: a will for what happens after death, a financial power of attorney and a healthcare directive for what happens before it.
People often have the will and neither of the other two, which leaves the most likely scenario uncovered.
Quick questions
- Does a power of attorney work after death?
- No. It ends at death. From that point the will and the person appointed to administer the estate take over.
- Can I cancel a power of attorney?
- Yes, while you still have capacity. Revocation should be in writing and notified to the agent and to any bank or institution relying on it.
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This page is general education, not legal advice, and reading it does not create an attorney-client relationship. Laws differ by state and every situation is different. For advice about your own situation, speak with a licensed attorney.
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