Terms of Use:   

Power of Attorney is a legal instrument that is used to delegate legal authority to another. The person who signs (executes) a Power of Attorney is called the Principal. The Power of Attorney gives legal authority to another person (called an Agent or Attorney-in-Fact) to make property, financial and other legal decisions for the Principal.

A Principal can give an Agent broad legal authority, or very limited authority. The Power of Attorney is frequently used to help in the event of a Principal's illness or disability, or in legal transactions where the principal cannot be present to sign necessary legal documents.

Are there different types of powers of attorney?

Yes. There are "Nondurable," "Durable," and "Springing" Power of Attorney. A "Nondurable" Power of Attorney takes effect immediately. It remains in effect until it is revoked by the Principal, or until the Principal becomes mentally incompetent or dies.

A "Nondurable" Power of Attorney is often used for a specific transaction, like the closing on the sale of residence, or the handling of the Principal's financial affairs while the Principal is traveling outside of the country.

A "Durable" Power of Attorney enables the Agent to act for the Principal even after the Principal is not mentally competent or physically able to make decisions. The "Durable" Power of Attorney may be used immediately, and is effective until it is revoked by the Principal, or until the Principal's death.

A "Springing" Power of Attorney becomes effective at a future time. That is, it "springs up" upon the happenings of a specific event chosen by the Power of Attorney. Often that event is the illness or disability of the Principal.

The "Springing" Power of Attorney will frequently provide that the Principal's physician will determine whether the Principal is competent to handle his or her financial affairs. A "Springing" Power of Attorney remains in effect until the Principal's death, or until revoked by a court.

When is it appropriate to use a "Durable" or "Springing" Power of Attorney?

"Durable" and "Springing" Powers of Attorney are frequently used to plan for a Principal's future incapacity or disability and loss of competence resulting, for example, from Alzheimer's Disease or a catastrophic accident.

By appointing an Agent under a "Durable" or "Springing" Power of Attorney, the Principal is setting up a procedure for the management of his or her financial affairs in the event of incompetence or disability.

If you become incapacitated and you do not have a durable power of attorney in place, a court proceeding is probably likely to determine how to manage your finances while you are unable to do so for yourself.

If you are married, your spouse does have some authority over property you own together -- to pay bills from a joint bank account, for example. However, there are significant limits on your spouse's right to sell property owned by both of you.

If your relatives go to court to get someone appointed to manage your financial affairs, they must ask a judge to rule that you cannot take care of your own affairs. 

What kinds of legal authority can be granted with a Power of Attorney?

    Whether "Nondurable," "Durable," or "Springing," a Power of Attorney can be used to grant any, or all, of the following legal powers to an Agent:

  • Buy or sell your real estate

  • Manage your property

  • Conduct your banking transactions

  • Invest, or not invest, your money

  • Make legal claims and conduct litigation

  • Attend to tax and retirement matters

  • Make gifts on your behalf

Can a Power of Attorney grant an Agent the authority to make medical decisions for the Principal?

No. This type of designation should be done in a living will.

What is required to create a Power of Attorney?

You must complete power of attorney forms and sign them in front of a notary public.  Some states also require additional witnesses to be legal. You can find suitable Power of Attorney forms with your state and on the internet. 

If you extend authority to deal with your real estate, you need to put a copy on file at the County Clerks office.  Otherwise, you are not required to file your Power of Attorney with any government entity.   The exception to this is in just two states, North and South Carolina, where you must also record your Power of Attorney with the state.  You will be required to provide your Power of Attorney documents to all

How do I select an Agent for a Power of Attorney?

You should choose a trusted family member, a proven friend, or a professional with an outstanding reputation for honesty. Remember, signing a Power of Attorney that grants broad authority to an Agent is very much like signing a blank check.

Certainly, you should never give a Power of Attorney to someone you do not trust fully. And do not allow anyone to force you into signing a Power of Attorney.

Can I appoint more than one Agent in a Power of Attorney?

Yes. You may appoint multiple Agents. If you appoint two or more Agents, you must decide whether they must act together in making decisions involving your affairs, or whether each can act separately.

There are advantages and disadvantages to both forms of appointment. Requiring your Agents to act jointly can safeguard the soundness of their decisions. On the other hand, requiring agreement of all your Agents can result in delay or inaction in the event of a disagreement among them, or the unavailability of one of them to sign legal documents.

Allowing your Agents to act separately may ensure that an Agent is always available to act for you. But it may also result in confusion and disagreements if the Agents do not communicate with one another, or if one of them believes that the other is not acting in your best interests.

Powers of Attorney are only as good as the Agents who are appointed. Appointing a trustworthy person as an Agent is critical. Without a trustworthy Agent, a Power of Attorney becomes a dangerous legal instrument, and a threat to the Principal's best interests.

Once I sign a Power of Attorney, may I continue to make legal and financial decisions for myself?

Yes. The Agent named in a Power of Attorney is your representative, not your "boss." As long as you have the legal capacity to make decisions, you can direct your Agent to do only those things that you want done.

What are an Agent's obligations to a Principal?

The Agent is obligated to act in the best interests of the Principal, and to avoid any "self-dealing." Self-dealing is acting to further the selfish interests of the Agent, rather than the best interest of the Principal.

An Agent appointed in a Power of Attorney is a fiduciary, with strict standards of honesty, loyalty and candor to the Principal. An Agent must safeguard the Principal's property, and keep it separate from the Agent's personal property. Money should be kept in a separate bank account for the benefit of the Principal. Agents must also keep accurate financial records of their activities, and provide complete and periodic accountings for all money and property coming into their possession.

Make clear to your Agent that you want accurate records of all transactions completed for you, and to give you periodic accountings. You can also direct your Agent to provide an accounting to a third party-a member of your family or trusted friend-in the event you are unable to review the accounting yourself.

Is it possible for an Agent to steal my money and property?

Yes. A Power of Attorney can be abused, and dishonest Agents have used Powers of Attorney to transfer the Principal's assets to themselves and others. That is why it is so important to appoint an Agent who is completely trustworthy, and to require the Agent to provide complete and periodic accountings to you or to a third party.

Who monitors the actions of my Agent?

There is no official or government monitoring of Agents acting pursuant to a Power of Attorney. That is the responsibility of the Principal. It is therefore important to insist that your Agent keep accurate records of all transactions completed for you, and to provide you with periodic accountings. You might also direct your Agent to give an accounting to a third party in the event you are unable to review the accounting yourself.

Should a Principal, member of the Principal's family or a friend have grounds to believe that an Agent is misusing a Power of Attorney, the suspected abuse should be reported to the police or other law enforcement authority to protect the Principal from the loss of his or her property. Consider asking a lawyer for help and advice.

What can I do if my Agent does not follow my instructions?

You may revoke your Power of Attorney at any time.

You should inform your Agent, in writing, that you are revoking the Power of Attorney. Request the return of all copies of your Power of Attorney.

You should notify your bank or other financial institution where your Agent has used the Power of Attorney that it has been revoked.

You should file a copy of the revocation with the County Clerk if your Power of Attorney has been filed in the Clerk's office.

If you decide to revoke a Power of Attorney, it is probably in your best interests to consult a lawyer, and arrange to have a new Power of Attorney executed.

How many copies of a Power of Attorney should I sign?

You are required to sign (execute) only one copy. However, it is not unusual for a Principal to sign several original copies. Banks and financial institutions, for example, generally require an original or a certified copy before allowing an Agent to transact business on the Principal's behalf. And banks frequently provide customers with their own Power of Attorney forms.

Do I need a lawyer to prepare a Power of Attorney?

No. You're not required to use a lawyer. However, this document is a critical document and you need to exercise caution to ensure that the Power of Attorney is providing what you expect.