Power of Attorney (POA)
A power of attorney is a legal document that authorizes a designated person (the agent or attorney-in-fact) to make financial, legal, or healthcare decisions on behalf of another person (the principal), either immediately or upon incapacity.
Exam Tip
POA ends at death (use trust/will for after). Durable = immediate + survives incapacity. Springing = only upon incapacity.
What is a Power of Attorney?
A power of attorney (POA) is a legal document that grants someone you trust the authority to act on your behalf in specified matters. The person granting the authority is called the "principal," while the person receiving the authority is called the "agent" or "attorney-in-fact."
Types of Power of Attorney
| Type | Description | When Active |
|---|---|---|
| General POA | Broad authority over financial matters | Immediately upon signing |
| Limited/Special POA | Specific tasks only (e.g., sell a house) | For specified purpose/time |
| Durable POA | Remains effective during incapacity | Immediately, continues through incapacity |
| Springing POA | "Springs" into effect upon incapacity | Only after triggering event |
| Healthcare POA | Authority over medical decisions | Per document terms |
Durable vs. Springing Power of Attorney
| Feature | Durable POA | Springing POA |
|---|---|---|
| Effective Date | Immediately upon signing | Upon specified event (usually incapacity) |
| Delay Risk | None - agent can act immediately | May face delays proving incapacity |
| State Acceptance | Recognized in all states | Some states don't recognize |
Important Limitations
- POA ends at death - Agent cannot act after principal dies (use will/trust)
- POA can be rejected - Banks/institutions may refuse to honor
- Agent is fiduciary - Must act in principal's best interest
Common Misconceptions
- "My spouse can automatically handle my affairs." Reality: Without a POA, even spouses may need court approval to access accounts.
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Related Terms
Healthcare Proxy
A healthcare proxy is a legal document that designates a trusted person (the agent or proxy) to make medical decisions on your behalf if you become unable to communicate or make decisions for yourself due to illness or incapacity.
Living Will (Advance Directive)
A living will is a legal document that specifies a person's wishes regarding medical treatment and life-sustaining measures if they become terminally ill or permanently incapacitated and unable to communicate their decisions.
Probate
Probate is the legal process through which a deceased person's will is validated by a court, debts are paid, and remaining assets are distributed to beneficiaries, typically taking several months to over a year and involving court supervision.