What Is a Power of Attorney (POA)? Types, How & When to Use

A power of attorney is a legal document that gives a person the authority to act on another's behalf.
Taryn Phaneuf
By Taryn Phaneuf 
Edited by Tina Orem

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What is a power of attorney?

A power of attorney is a legal document that gives a person to make legal, financial or medical decisions for someone else.

American Bar Association. Power of Attorney. Accessed May 4, 2022.
Designating a power of attorney can ensure your wishes are fulfilled if you become temporarily or permanently incapacitated.

  • You can grant anyone power of attorney as long as they’re a legal adult and of sound mind. 

  • If you’re married, most states recognize your spouse as a medical decision-maker if you become incapacitated and don’t have a medical power of attorney in place. 

  • You can give one person power of attorney for all your needs, or you can split the responsibilities among different people.

  • Power of attorney authorizations can be general or specific, depending on your needs. When granting power of attorney, consider the scope of your agent’s authority, its duration and when it should take effect.

If you don't have a power of attorney and become incapable of managing your personal or business affairs, a court could appoint someone to act for you. Court intervention could turn a private matter into a public proceeding, and there's no guarantee that a court-selected guardian would act as you wish.

Dual power of attorney

Dual power of attorney, also called joint power of attorney, gives power to two people and requires that both agents sign off on any decisions. Appointing dual agents can balance the burden on each person, though both are held legally accountable if necessary. 

A dual power of attorney might be useful if you have two children, for example, who would like to make joint decisions in your stead. But whether you appoint one agent or two, you also should select successor agents for each power of attorney in case the primary person you name is unavailable or unable to act when needed.

Medical power of attorney

A medical power of attorney, also called a health care proxy, is a type of advance directive that gives someone the authority to make all health care decisions for you in accordance with your wishes, including religious and moral beliefs, when you're unable to do so.

Health care proxy decisions generally cover any medical treatment or procedure to diagnose and treat your condition. Make sure the person to whom you grant medical power of attorney understands the decisions you want to be made in connection with different types of treatment.

American Bar Association Commission on Law and Aging. Giving Someone a Power of Attorney For Your Health Care. Accessed Feb 21, 2023.

Limited power of attorney

A limited power of attorney allows your agent to perform only activities you outline. For example, you could authorize someone to execute documents in your name to sell your home. Similarly, you could authorize someone to make medical decisions for you but not financial ones.

You can set up a limited power of attorney to take effect after a specified event occurs, called a springing power of attorney. This approach could ensure an agent is authorized to act on your behalf as soon as you become incapacitated. However, your agent will have to wait until your doctors decide you’re unable to handle your own affairs before they can act, which may not take effect as soon as you would want.

Financial power of attorney

Financial power of attorney gives someone, called an agent, the authority to handle your financial affairs.

American Bar Association. Pick the Right Power of Attorney Instrument. Accessed Feb 21, 2023.
These can include everyday tasks, such as banking transactions, to more complex moves, such as transferring property into a trust.

The person you grant power of attorney is a fiduciary, meaning they’re legally bound to make decisions that are in your best interest. The financial matters you can authorize them to handle may include:

  • Distribution of assets to cover daily expenses.

  • Real and personal property transactions.

  • Stock, bond or other securities trades.

  • Banking duties.

  • Business operations.

  • Insurance and annuity transactions.

  • Estate, trust and other beneficiary needs.

  • Legal claims and other litigation.

  • Retirement benefits payments.

  • Charitable contributions.

  • Handling of government benefits, including Social Security, Medicare or unemployment compensation.

Who can override a power of attorney? 

  • You, the principal, can revoke or change a power of attorney designation whenever you wish if you’re of sound mind.

  • Your incapacity ends a nondurable power of attorney but not a durable power of attorney.

  • Your death ends all power of attorney designations. Responsibilities related to your will and the distribution of your property rest with the executor of your estate.

  • A court decree can invalidate your power of attorney designation if the court finds that your agent is not fit to serve. Someone in your life who is concerned about neglect or exploitation, for example, may challenge a power of attorney designation in court.

  • Change in circumstances, such as divorce, in some states, can remove a former spouse’s automatic power of attorney.

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