Power of Attorney: When You Need One

Power of Attorney: When You Need One

By Kimberly Rotter   Updated May 18, 2022

Reviewed By Khadija Khartit   Fact Checked By Ryan Eichler

A power of attorney (POA) is a legal document in which the principal (you) designates another person (called the agent or attorney-in-fact) to act on your behalf. The document authorizes the agent to make either a limited or broader set of decisions. The term "power of attorney" can also refer to the individual designated to act in this way.

KEY TAKEAWAYS

A power of attorney (POA) is a legal document that gives an individual, called the agent or attorney-in-fact, the authority to take action on behalf of someone else, called the principal.

The agent can have either extensive or limited authority to make legal decisions about the principal's property, finances, or healthcare, depending on the terms of the POA.

Types of POA include conventional, also known as a limited power of attorney, durable, which lasts for a lifetime unless you cancel it, springing, which only comes into play for specific events, and medical, also known as a durable power of attorney for healthcare.1

How a Power of Attorney (POA) Works

Certain circumstances may trigger the desire for a power of attorney (POA) for someone over the age of 18. For example, someone in the military might create a POA before deploying overseas so that another person can act on their behalf should they become incapacitated.

Incapacity isn't the only reason someone might need a POA, though. Expatriates workers and families need to set a POA for their affairs in America while doing their work overseas. Younger people who travel a great deal might set up a POA so that someone can handle their affairs in their absence, especially if they have no spouse to do so. However, POAs are most commonly established when someone is elderly or if they face a serious, more long-term health crisis.

If you have a POA and become unable to act on your own behalf due to mental or physical incapacity, your agent or attorney-in-fact may be called upon to make financial decisions to ensure your well-being and care. For example, they may need to pay bills, sell assets to pay for medical expenses, and take steps for Medicaid planning for you.

Other important tasks a POA can authorize someone to carry out are banking transactions, real estate decisions, dealing with government or retirement benefits, and healthcare billing.

How to Get a Power of Attorney (POA)

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