A power of attorney (POA) is a legal document that authorizes one person (called the agent, attorney-in-fact, or attorney) to act on behalf of another person (called the principal or donor) in private, financial, business, or legal matters. This authorization can be broad or limited to specific tasks and can cover decisions about property, finances, or medical care
. There are different types of POAs:
- Financial Power of Attorney: Allows the agent to manage financial affairs, such as paying bills, handling investments, or selling property. It can be used for short-term or long-term planning, especially if the principal becomes unable to manage their finances due to illness or absence
- Health Care Power of Attorney: Authorizes the agent to make medical decisions for the principal if they become incapacitated
- Durable Power of Attorney: Remains effective even if the principal becomes mentally or physically incapacitated, unlike a regular POA which ends if the principal loses capacity
- Ordinary Power of Attorney: Usually temporary and ends if the principal loses mental capacity
The person given the power must act honestly and loyally as a fiduciary for the principal. The POA can be revoked by the principal at any time as long as they are mentally competent, and it automatically ends upon the principal’s death
. POAs are useful for planning ahead to ensure that trusted individuals can manage your affairs if you become unable to do so yourself, avoiding the need for court-appointed guardianship
. In summary, a power of attorney is a legal tool that allows you to designate someone to make decisions and act on your behalf in financial, legal, or health matters, especially useful in cases of incapacity or absence
