A power of attorney (POA) is a legal document that lets you appoint someone you trust to make decisions on your behalf — financial, medical, or both. It's one of the most important documents you can have, yet most people don't set one up until it's too late. If you become incapacitated without a POA, your family may need to go through an expensive court process to make decisions for you.
A financial power of attorney lets your agent pay bills, manage investments, sell property, file taxes, and handle other financial matters. It can be effective immediately or only upon your incapacity.
A healthcare power of attorney (also called a healthcare proxy) lets your agent make medical decisions if you can't communicate — including treatment options, facility choices, and end-of-life care.
A standard POA becomes invalid if you become mentally incapacitated — which is exactly when you need it most. A "durable" POA specifically states that it remains in effect during incapacity.
You don't have to give your agent unlimited power. You can restrict a POA to specific transactions, accounts, or time periods. And as long as you're mentally competent, you can revoke it whenever you want.
Your agent has a fiduciary duty to act in your best interest, but abuse does happen. Choose someone you trust completely, and consider naming a backup agent in case your first choice is unable or unwilling to serve.
Need a estate planning attorney? Browse partner attorneys for Wills & Estate Planning
NotALawyer.com provides general legal information, not legal advice.