A power of attorney is a legal document that gives someone the authority to sign documents and conduct transactions on another person’s behalf. A person who holds a power of attorney is sometimes called an attorney-in-fact.
Many people sign a financial power of attorney, known as a durable power of attorney, to give a friend or family member the power to conduct financial transactions for them if they become incapacitated. People also commonly sign health care powers of attorney to give someone else the authority to make medical decisions if they are unable to do so.
Powers of attorney have other uses as well. You might give someone power of attorney to act in a particular transaction if you cannot do it yourself, such as signing documents at a real estate closing when you are out of town.
How to sign as power of attorney
When you sign a document as someone’s attorney-in-fact, your signature needs to make it clear that you—not they—are signing the document and that you are acting under the authority of a power of attorney.
To understand how this works, let’s suppose your name is Jill Jones and you have power of attorney to act for your friend, Sam Smith. You could sign a document in either of the following ways:
- “Sam Smith, by Jill Jones under POA”
- "Jill Jones, attorney-in-fact for Sam Smith”
Before signing, it’s a good idea to ask if there’s a preferred format for your signature. Sometimes banks or other institutions will only accept a power of attorney signature if it’s written in a certain way. You should never sign your name or the other person’s name without indicating that you are signing under a power of attorney.
Always bring your power of attorney document with you when you transact business on someone else’s behalf and make sure the people you do business with know that you are acting under a power of attorney.
Duties of an attorney-in-fact
A person who acts under a power of attorney is a fiduciary. A fiduciary is someone who is responsible for managing some or all of another person’s affairs. The fiduciary has a duty to act prudently and in a way that is fair to the person whose affairs he or she is managing. An attorney-in-fact who violates those duties can face criminal charges or can be held liable in a civil lawsuit.
Because of this fiduciary relationship, any transaction where you will personally benefit can raise questions about whether you are acting in the best interest of the person who gave you the power of attorney. It’s a good idea to consult a lawyer before signing as power of attorney in a transaction where you will reap substantial benefits.
Things to watch out for
Don't exceed your authority. A power of attorney document may give you broad power to transact business, or your powers may be more limited. Make sure you understand what you are and aren’t allowed to do as attorney-in-fact, and consult a lawyer if you need clarification. You could face civil or criminal penalties for unauthorized transactions.
Failing to add the power of attorney language to your signature. If you sign a document in your own name without indicating that you are acting under a power of attorney, you could be held personally responsible for the transaction. If you sign only the principal’s name, you could face criminal or civil penalties for fraud or forgery.
A power of attorney can be invaluable if you need to manage the affairs of an ailing relative or sign documents on behalf of someone who is unavailable. If you act as attorney-in-fact for someone, make sure you understand your authority and responsibility, and always sign in a way that indicates that you’re acting under a power of attorney.
Signing power of attorney FAQs
How do I properly sign documents when acting as someone's power of attorney?
You must clearly show that you're signing on behalf of someone else, not for yourself. You can write the principal's name first, then add "by [your name] under POA" or write your name followed by "attorney-in-fact for [principal's name]." Never sign just your own name or just the principal's name, as this can create serious legal problems. Always bring the original power of attorney document with you when signing in case the institution needs to see it.
What happens if I sign incorrectly as someone's power of attorney?
Signing incorrectly can cause serious legal issues including personal liability or forgery charges. Banks and other institutions might also refuse to accept improperly signed documents. This means you'll have to redo the paperwork, which wastes time and can cause problems for the person you're trying to help.
What are my responsibilities when acting as someone's power of attorney?
You have what's called a "fiduciary duty," which means you must always act in the best interest of the person who gave you power of attorney. You can only do what the power of attorney document says you can do, so if it says you can pay bills and manage bank accounts, you cannot sell their house or make medical decisions. You must keep good records of everything you do with their money or property. This includes saving receipts and keeping good track of bank statements, as you could be questioned by the courts or other concerned parties.
Do I need to show the power of attorney document every time I sign something?
Yes, you should always bring the original power of attorney document and be prepared to show it, though the institution you’re dealing with could require more information. Be prepared to sign additional documents or have your power of attorney form notarized, as banks and government offices need to verify that you have this legal authority.
Can I do anything I want with someone's money if I have their power of attorney?
No, you can only do what the power of attorney document specifically allows you to do. Going beyond what you're allowed to do can result in serious legal consequences, including being sued or facing criminal charges. If you need to do something that isn't clearly covered in the power of attorney document, you should talk to a lawyer first. It's better to get legal advice than to risk getting into trouble for overstepping your authority.
What's the difference between a durable and regular power of attorney?
A durable power of attorney stays in effect even if the person becomes unable to make decisions for themselves due to illness or injury. A regular (non-durable) power of attorney is usually used for temporary situations, like when someone is traveling out of the country, and it automatically ends if the person becomes incapacitated. Most people choose durable power of attorney, because it's designed to help when someone really needs it most.
When should I talk to a lawyer about power of attorney issues?
You should consult a lawyer if you're unsure about whether you can do something specific, if an action you need to take may benefit you personally, if others are questioning your decisions, or if you’re dealing with complex financial matters. Legal advice can protect you from potential lawsuits or criminal charges.
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