Power of Attorney: Types and Why People Use Them

A power of attorney is a legal document that lets one person, called the principal, give another person, called the agent or attorney-in-fact, authority to act for them. The agent might pay bills, manage a bank account, sign documents, or make health care decisions, depending on what the document allows. People use powers of attorney for many reasons, including travel, illness, age-related changes, or simply wanting a trusted person ready to help. This article describes the main types in general terms. It is not a form, and it does not say which type to choose.

Why people use them

A power of attorney can make everyday matters easier when the principal cannot easily handle them alone. It may be useful if you are going to be out of the country for a long period, recovering from surgery, or dealing with a condition that makes it hard to manage money or paperwork. It can also prevent a family from having to ask a court to appoint a guardian or conservator, which is generally a longer and more public process.

The document is only as good as the choice of agent and the terms written into it. Because the agent can act with significant authority, the decision should be made carefully.

General versus limited

A general power of attorney gives the agent broad authority over many financial or legal matters. A limited or special power of attorney covers only specific tasks, such as selling one property, signing a single contract, or handling a particular bank account. A limited document can be a good fit when the need is narrow, because it leaves less room for misuse.

Durable versus non-durable

A durable power of attorney stays in effect if the principal later becomes unable to make decisions. A non-durable power of attorney generally ends when the principal becomes incapacitated. Many people choose a durable document for that reason, but the document must usually state clearly that it is durable. The exact wording and signing rules are set by state law.

Springing powers

A springing power of attorney takes effect only after a specific event, such as a doctor's written statement that the principal is no longer able to manage their affairs. Some people prefer this approach because it keeps authority with the principal for as long as possible. The downside is that the trigger can be hard to prove quickly, and banks or others may be reluctant to accept the document until the condition is shown.

Financial versus health care

Financial powers of attorney cover money, property, and business matters. Health care powers of attorney, sometimes called health care proxies or health care directives, cover medical decisions. These are separate documents in many states. Health care documents are covered in the article “Healthcare Directives: What to Know Before You Need One.”

What the agent is expected to do

An agent generally owes the principal a duty to act in good faith, stay within the authority granted, keep records, and avoid using the principal's property for their own benefit. In many states, the agent must keep the principal's money separate from their own and must be able to account for transactions if asked. Those duties are not always spelled out in the document, but they still apply under state law.

If an agent acts outside their authority or takes advantage of the principal, the principal or a family member can ask a court to review the agent's conduct. Choosing someone with a track record of honesty and good judgment is one of the most important parts of the process.

Choosing an agent

People often name a spouse, adult child, sibling, or close friend. It helps to choose someone who is willing to take on the role, who lives close enough to act when needed, and who understands your wishes. Many people also name a backup agent in case the first one cannot serve.

Think about whether the agent would be able to handle recordkeeping and financial tasks. It may also help to talk through your wishes in advance, so the agent knows what matters to you.

Signing and acceptance

State law sets the signing rules. Some states require a notary, while others require witnesses or both. Some states have official statutory forms. A bank or other institution may also have its own form or require extra steps before accepting a document. Ask the institution in advance so you know what it needs.

A power of attorney can usually be revoked while the principal has the ability to make decisions. To revoke it, the principal generally has to notify the agent and any institution that relied on the document. A power of attorney generally ends at the principal's death, and then the estate process applies.

Questions to ask before you sign

• Do I want a general, limited, or springing document?
• Should it stay in effect if I become unable to make decisions?
• Who is my first choice and backup agent, and why?
• What records should the agent keep?
• Does my state require a specific form, notarization, or witnesses?
• Will my bank or other institutions accept the document?

For background on legal processes, the USA.gov family legal issues page is a good starting point. If you cannot afford a private lawyer, the USA.gov legal aid page lists ways to find free or low-cost help, including programs that help people complete some legal forms. A licensed attorney in your state can explain the local rules and help you avoid problems with acceptance. Our estate planning practice page lists lawyers who handle these documents.

Frequently asked questions

Does a power of attorney last forever? Not necessarily. It can be limited by its terms, revoked by the principal while able to act, or end at the principal's death. Some documents also end on a specific date.

Can an agent be removed? A principal who is able to decide can generally revoke the document or replace the agent. If the principal is no longer able to act, a court may be involved in addressing problems.

Does a power of attorney let the agent make any decision? No. The agent can act only within the authority the document gives. Some powers are not granted unless the document names them specifically.

Do I need a lawyer to create one? Not always, but a lawyer can help make sure the document meets state requirements and fits your goals. The rules are different enough that a document from another state may need review.

General information, not legal advice. Laws change and every case is different. Talk to a licensed attorney in your state about your situation.