Do You Need a Power of Attorney?

What is a power of attorney?

A power of attorney (sometimes shortened to POA) is a legal document that gives one person the authority to act on behalf of another person in legal, financial, or medical matters. 

This document creates a fiduciary relationship where the appointed person must act in the best interests of the person granting the authority. This legal arrangement allows the agent to make decisions and take actions as if they were the principal themselves, within the specific powers granted by the document. The scope of authority can range from handling a single business transaction to managing all financial and legal affairs.

The person granting the power is called the "principal," while the person receiving the authority is called the "agent" or "attorney-in-fact." Despite the name, the agent does not need to be a lawyer. 

Types of power of attorney

Understanding the different types of power of attorney helps you choose the right document for your specific needs. Each type serves distinct purposes and offers different levels of authority and duration. In 2025, most state laws recognize several standard types, though terminology and requirements may vary by jurisdiction. It should be noted that many types of power of attorney overlap. For example, you can have a financial power of attorney that is limited, durable, and springing.

Financial power of attorney

A financial power of attorney specifically focuses on financial matters and property management. Your attorney-in-fact can handle banking transactions, pay bills, manage investments and bank accounts, file tax returns, and conduct real estate transactions.

Healthcare power of attorney

A healthcare power of attorney, also called a medical power of attorney or healthcare proxy, is a type of durable power of attorney, authorizing your agent to make medical decisions when you cannot. This includes choosing doctors, approving treatments, accessing medical records, and making end-of-life decisions.

This legal document is crucial because medical emergencies can happen suddenly, leaving you unable to communicate your medical wishes. Your attorney-in-fact should understand your values and preferences regarding medical care, such as whether you want to avoid being put on life support.

Limited power of attorney

Unlike a general power of attorney that grants broad and sweeping powers, a limited or special power of attorney grants authority for specific tasks or time periods. For example, you might give someone power to sign documents at a real estate closing or handle a particular business transaction while you're traveling.

These types of POA forms are commonly used for convenience rather than incapacity planning. The document clearly defines what the agent can and cannot do, and it typically expires after the specified task is completed or the time period ends.

Durable power of attorney

Powers of attorney that are durable remain in effect even after you become mentally incapacitated. The document must include specific language stating that it will continue despite your incapacity, such as "This power of attorney shall not be affected by my subsequent incapacity." Durable powers of attorney are essential for estate planning because they ensure someone can manage your affairs if you experience conditions that affect your decision-making capacity.

On the other hand, a nondurable power of attorney automatically terminates if you become incapacitated. It’s useful when you need comprehensive assistance with your affairs but are still mentally competent.

Springing power of attorney

A springing power of attorney only becomes effective when specific conditions are met, usually when you become incapacitated. The document must clearly define what constitutes a lack of mental capacity, often requiring certification from one or more physicians.

On the other hand, an immediate power of attorney goes into effect as soon as it’s signed.

When is a power of attorney needed?

A power of attorney becomes essential in various life situations. Understanding when you might need these documents helps you prepare for the smooth management of your affairs.

Incapacity planning

Mental or physical incapacity is the primary reason people create durable powers of attorney, as certain medical conditions may impair your ability to make informed decisions about your finances or healthcare.

Without these documents, your family may need to petition your local probate court for guardianship or conservatorship, a process that may require significant time and money. The court process also removes your choice of who will make decisions for you, as a judge will appoint someone based on legal priorities rather than your personal preferences.

Temporary absences

You might need a limited power of attorney when traveling abroad for extended periods, serving in the military, or being hospitalized for surgery. These situations don't involve incapacity but create practical needs for someone to handle your own affairs.

For example, if you're closing on a house while traveling for work, you could give your spouse or attorney the power to sign the closing documents on your behalf. This prevents delays and ensures that important real estate transactions can proceed on schedule. Another example might include giving a trusted friend the authority to oversee your bank accounts and pay expenses if you're away. 

Childcare situations

Parents may need to grant power of attorney to relatives or caregivers when children will be staying with them for extended periods. A childcare power of attorney might authorize the caregiver to enroll your child in school, consent to field trips, or approve emergency medical treatment when you cannot be reached immediately.

Roles and responsibilities of the agent

Serving as someone's agent under a power of attorney is a significant responsibility that involves both legal duties and practical challenges. The agent must understand their obligations and limitations to properly serve the principal's interests while avoiding potential legal problems.

Duties of the agent

An attorney-in-fact operates as a fiduciary, meaning they must legally act in the principal's best interests at all times. This relationship creates the highest level of legal duty, requiring the agent to put the principal's needs above their own and avoid any conflicts of interest (known as “self-dealing”). 

Agents must keep the principal's assets separate from their own and maintain detailed records of all actions taken on the principal's behalf. They should save receipts, financial statements, and other documentation that shows how they used their authority. Many agents find it helpful to keep a journal documenting decisions made and actions taken.

The attorney-in-fact cannot make gifts of the principal's property unless the power of attorney form specifically authorizes gift-giving. Even then, gifts are typically limited to the principal's established pattern of giving or require court approval for larger amounts. California law, for example, states that agents cannot “make or revoke a gift of the principal's property in trust or otherwise” unless expressly approved in the POA.

Authority limits and legal protections

The agent's power cannot exceed the powers noted in the POA, and they cannot make decisions outside of their designated scope. For example, an agent with financial power of attorney cannot make medical decisions unless they also have healthcare power of attorney.

Agents are generally protected from liability when they act in good faith within their granted authority. However, they can be held personally responsible for losses caused by exceeding their authority, self-dealing, or failing to act in the principal's best interests.

If questions arise about the agent's authority or actions, banks, healthcare providers, and other third parties may require proof of the agent's authority and evidence that they are acting appropriately.

How to set up a power of attorney

Creating a power of attorney involves several important steps to ensure that the document is legally valid and serves your needs effectively. While the requirements might vary slightly by state, following these general steps will help you create a comprehensive and enforceable power of attorney.

1. Determine what powers you want to grant

Start by identifying the specific areas where you need assistance. Consider whether you need financial management, healthcare decisions, or both. Think about both current needs and potential future situations.

Make a list of specific tasks your agent might need to handle, such as paying bills, managing investments, making insurance claims, or communicating with healthcare providers. This helps you choose the right type of power of attorney and ensure that it includes all necessary provisions.

2. Choose a trustworthy agent

Select someone you trust completely to act in your best interests. This person should be reliable, financially responsible, and capable of making difficult decisions under pressure. Consider their availability, location, and willingness to serve in this role.

Many people choose their spouse, adult children, or close family members as agents. However, the most important factors are trustworthiness and capability rather than family relationships. You should also name a backup agent (also called a successor or alternate agent) in case your first choice cannot serve.

3. Select the appropriate power of attorney type

Based on your needs assessment, choose between general or limited, durable or nondurable, and immediate or springing powers of attorney. For most advanced planning purposes, durable powers of attorney for both finances and health care are recommended.

4. Complete the correct forms

Many states provide official power of attorney forms that meet legal requirements. You can obtain a POA form from your state's website or legal aid organizations. You can also use an online legal service like LegalZoom to get more guided support. And of course, you can always use an attorney to help you create your power of attorney. Some states require specific language or formatting for the document to be valid.

Ensure that the document includes all legally required elements, such as your name and the agent's name, specific powers granted, effective date, and any limitations or special instructions. 

5. Sign and notarize the document

Most states require POA documents to be signed in the presence of a notary public. Some states also require witnesses who are not related to you or named in the document.

Check your state's specific requirements, as improper execution can invalidate the entire document. The principal must sign the document while mentally competent and without coercion from others.

6. Distribute copies and inform relevant parties

Provide copies of the power of attorney to your agent, successor agent, and any institutions where it might be used, such as banks, investment firms, and healthcare providers. Keep the original in a safe but accessible location.

Inform your family members and other important people in your life about the power of attorney and who you've chosen as your agent. This helps prevent confusion and conflicts if the document needs to be used.

Revoking or changing a power of attorney

Power of attorney documents can be modified or terminated under various circumstances. Understanding when and how to make changes ensures your documents continue to serve your needs as your life situation evolves.

When power of attorney automatically ends

A power of attorney automatically terminates when the principal dies, when the specified purpose is completed (for limited powers of attorney), or when the document's expiration date is reached. For example, nondurable powers of attorney end when the principal becomes mentally incapable of making their own medical, legal, or financial decisions.

In some states, if you divorce your spouse who serves as your agent, their designation as attorney-in-fact automatically ends. (In this case, if you named a successor agent, they would become your new attorney-in-fact.) However, it's better to formally revoke and create new documents rather than rely on automatic termination.

Process for revocation

To revoke a power of attorney, you typically need to create a written revocation document that clearly identifies the original power of attorney and states your intention to revoke it. Sign and notarize this document, following the same requirements as the original power of attorney. Be sure to check your state’s requirements for revocation or talk to an attorney.

Notify your agent, any backup agents, and all institutions that have copies of the original document about the revocation. Retrieve and destroy copies of the revoked document when possible to prevent confusion or misuse.

Power of attorney FAQs

Who can override a power of attorney?

Generally, only the principal can override or revoke their power of attorney while they remain mentally competent. However, courts can intervene if there's evidence of abuse, fraud, or the agent not acting in the principal's best interests. Adult Protective Services or elder law organizations in your state may also investigate suspected abuse of vulnerable adults.

Family members cannot override a power of attorney simply because they disagree with the agent's decisions unless they can prove that the agent is exceeding their authority or acting improperly.

Does a power of attorney expire?

Power of attorney documents may include expiration dates, but many are designed to remain in effect until revoked or until the principal's death. Durable powers of attorney specifically continue even after incapacity, while nondurable powers of attorney end when the principal is no longer of sound mind.

Can there be more than one agent?

Yes, you can appoint multiple agents to serve together (co-agents) or separately (successor agents). Co-agents must make decisions together, which can provide additional oversight but may also create delays or conflicts. Successive agents serve one at a time, with the backup agent taking over if the primary agent cannot serve.

When appointing multiple agents, clearly specify whether they must act together or can act independently, and establish procedures for resolving disagreements.

What is the difference between a durable and a nondurable of attorney?

A nondurable power of attorney becomes invalid if the principal becomes incapacitated (this is a nondurable POA), while a durable power of attorney continues in effect during incapacity. The key difference is specific language in the document stating that it will not be affected by the principal's incapacity.

For estate planning purposes, durable powers of attorney are essential because they provide protection when you need it most—during periods of incapacity.

Do I need a lawyer to create a power of attorney?

While you can create a power of attorney without a lawyer using state forms or online services, consulting with an attorney is advisable for complex situations. LegalZoom provides the best of both worlds because we offer access to our network of attorneys. An attorney can ensure that the document meets your state's requirements and addresses your specific needs.

Consider legal consultation if you have substantial assets, complex family situations, or certain circumstances that might require customized language in your power of attorney.

What happens if there's no power of attorney in place?

Without a power of attorney, no one has automatic authority to make decisions for you if you become incapacitated. Your family would need to petition the probate court for guardianship or conservatorship. The court will appoint someone to make decisions for you, but this person may not be who you would have chosen. Additionally, there will need to be court supervision. 

What are the limits of a power of attorney?

A power of attorney cannot authorize the agent to make decisions after the principal's death, change the principal's will, or act beyond the specific powers granted in the document. Agents also cannot delegate their authority to others unless specifically authorized. The agent must always act in the principal's best interests and cannot use their authority for personal benefit or to benefit others at the principal's expense.

How LegalZoom can help with a power of attorney

Drafting a power of attorney requires careful attention to legal requirements and your specific needs. For peace of mind without breaking the bank, use LegalZoom’s financial power of attorney services. You’ll fill out an online questionnaire and receive a POA tailored to your needs, then you’ll be able to make unlimited revisions for 30 days. Opt for a premium plan to consult with an attorney and get advice about specific questions or concerns. We also offer comprehensive estate plans if you want to take your protection a step further.

Edward A. Haman, Esq., contributed to this article.