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Power of Attorney: What it is and why it matters

While a Will lets you include instruction about how to handle your estate after your death, what do you do when you need help managing your estate while you're still alive? The answer: you create a Power of Attorney.

Art by Pia Guerra

Despite the cool-sounding name, a Power of Attorney is simply a legal document that allows you to grant someone else the authority to act on your behalf specifically with regards to financial decisions and legal decisions.

What does a Power of Attorney do?

A Power of Attorney lets you name specific individuals who will serve as your agents or attorneys-in-fact and can act on your behalf when needed. Typically you will name a primary agent and a secondary agent, to step in if the primary person is not able to act on your behalf. You may also name professional fiduciaries, such as a financial institution or other organization that offers this service.

This document is important because it ensures that someone can step up and act on your behalf during your life if you're not able to make these decisions yourself. For example, if you become incapacitated or disabled to the point of being unable to handle these affairs yourself, the Power of Attorney form makes sure someone is appointed to help you. This form can also cover situations when you are out of the country and cannot be physically present for certain transactions.

When does the Power of Attorney take effect?

It is up to you to decide when you want your agent to have the power to act on your behalf. Typically people choose one of two options: 1) immediate or 2) springing.

If you choose for your Power of Attorney to become effective immediately, your agent will be able to act as soon as you sign and notarize the document.

If you choose springing, the document will "spring" into effect only when a medical provider makes a written determination that you are incapacitated and cannot make these types of decisions for yourself. You can clarify the requirements for when the document should spring into effect, such as requiring that two medical providers must make an assessment instead of one.

What types of power will my agent get?

The Power of Attorney document covers legal and financial actions only. Once the document is determined to be in effect, your agent will be able to assist you with things like paying bills on your behalf, buying or selling property for you, and responding to legal summons for you.

You can decide what types of powers to grant to your agent, but typically the document covers transactions of real property (e.g., land, houses, condos, etc.); transactions of personal property; bank transactions; safe deposit access; legal actions; government benefits; and power to access and manage other such assets.

What happens if I don't have a Power of Attorney?

If you don't have a Power of Attorney and you need help managing these decisions, the court will have to establish a conservatorship or guardianship. Your agent will be called a conservator or a guardian. The process of appointing a conservator or guardian can be lengthier and more complex, as it requires someone to file a petition with the court. This means there may be some delay between becoming incapacitated and getting someone appointed to help you. That's why it is especially important to create these documents while you still have decision-making capacity.

Does the Power of Attorney cover medical decisions?

No. The Power of Attorney only covers financial and legal decisions. For medical decisions, you will need an Advance Health Care Directive (also called a Living Will or a Medical Power of Attorney).

I've heard the term "Durable Power of Attorney." What does "durable" mean?

A Durable Power of Attorney means that the power granted to the agent will continue even if you are declared to be incapacitated. This typically applies in situations where someone has a Power of Attorney that is immediately effective. If it is "durable," it means that your agent's authority will endure even if a medical provider determines that you are unable to make your own decisions.


Pride Law PLLC can help you set up your estate plan. Message our firm or schedule your consultation today.

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