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What Can a Power of Attorney Do?
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A power of attorney is like giving someone a key to handle your important business when you can't. Think of it as officially naming a trusted person to act on your behalf. This person becomes your "agent" or "attorney-in-fact." But what exactly can they do with this authority?
The answer depends on what type of power of attorney you create. You get to decide how much power to give and when it becomes active. It's your choice entirely.
Financial Powers of Attorney
A financial power of attorney gives your agent control over money matters. This is probably the most common type people think about.
Your agent can handle banking for you. They can deposit checks, pay bills, and transfer money between accounts. They can also manage your investments. This means buying or selling stocks, bonds, or mutual funds in your name.
Real estate transactions are another big area. Your agent can buy, sell, or refinance property. They can sign contracts and handle closing documents. They can also manage rental properties if you own them.
Tax matters fall under this umbrella too. Your agent can file tax returns, deal with the IRS, and handle tax payments. They can also apply for government benefits on your behalf.
Business operations are covered as well. If you own a business, your agent can make day-to-day decisions. They can sign contracts, hire employees, and handle business finances. For entrepreneurs and business owners, understanding these powers becomes even more critical when considering the broader implications of fiduciary duty that your agent assumes.
Insurance matters are included. Your agent can file claims, change beneficiaries, and even purchase new policies for you.
Healthcare Powers of Attorney
Healthcare power of attorney is completely separate from financial matters. This gives your agent the right to make medical decisions when you cannot. This type of arrangement creates what's legally known as an agency relationship specifically focused on healthcare choices.
Your healthcare agent can talk to doctors about your condition. They can access your medical records and get test results. They can also choose which treatments you receive.
Hospital and facility decisions are part of this power. Your agent can decide where you receive care. They can move you to different facilities if needed.
End-of-life decisions often fall to your healthcare agent. They can make choices about life support, feeding tubes, and comfort care. This is why choosing someone who knows your values is so important.
Mental health treatment is another area. Your agent can authorize psychiatric care or counseling services. In some cases, these decisions might require court approval, particularly when dealing with long-term psychiatric commitments or experimental treatments.
Limited vs. General Powers
You don't have to give away all your power at once. A limited power of attorney covers only specific tasks. Maybe you just want someone to sell your house while you're out of the country. Or handle one business deal.
A general power of attorney gives much broader authority. Your agent can handle most financial or legal matters. This type is more common for long-term planning.
The key is being specific about what you want. The more detailed your document, the clearer your agent's authority becomes. Some people create what's called a "hybrid" approach, combining limited powers for certain areas with broader authority in others.
When Powers Become Active
Timing matters a lot with powers of attorney. Some become active immediately when you sign them. Others only kick in under certain circumstances.
A durable power of attorney stays in effect even if you become incapacitated. This is the most useful type for long-term planning. It keeps working when you need it most.
A springing power of attorney only becomes active when specific events happen. Usually, this means when you become unable to handle your own affairs. A doctor typically has to certify your incapacity. However, this certification process can sometimes create delays when urgent decisions need to be made.
Non-durable powers end if you become incapacitated. These are mainly useful for temporary situations when you're still mentally competent. For instance, if you're traveling abroad for several months and need someone to handle specific transactions back home.
What Your Agent Cannot Do
Even with broad powers, your agent has limits. They cannot change your will or create a new one. They cannot make decisions that go against your known wishes.
Your agent cannot give away your property to themselves unless you specifically allow it. They cannot mix your money with their own money. This prohibition exists to prevent conflicts of interest and protect you from financial abuse.
They cannot make decisions after you die. Power of attorney ends when you pass away. At that point, your will or trust takes over.
Healthcare agents cannot override your own decisions if you're still able to communicate. They also cannot authorize anything illegal or unethical. Additionally, they cannot force you to receive treatment against your will if you're mentally competent to make that decision.
Responsibilities of Your Agent
Your agent has serious responsibilities. They must act in your best interest, not their own. They must keep good records of all transactions.
They cannot delegate their authority to someone else without permission. They must avoid conflicts of interest. And they must follow your instructions as written in the document.
If they misuse their power, they can face legal consequences. This is why choosing someone trustworthy is absolutely critical. Agents can be held personally liable for damages caused by their negligence or misconduct. In some cases, criminal charges might even apply if fraud or theft is involved.
State-Specific Variations and Requirements
Different states have varying rules about powers of attorney. Some require specific language or witnessing procedures. Others have different rules about when healthcare powers become effective.
Certain states require that financial institutions accept your power of attorney document within a specific timeframe. Banks sometimes have their own forms they prefer, though they generally cannot require you to use only their documents.
If you move to a different state, your power of attorney might need updating. It's wise to review these documents whenever you relocate to ensure they comply with local laws and will be recognized by local institutions.
Choosing the Right Agent
Pick someone you trust completely. This person will have significant control over your life. They should be responsible, organized, and available when needed.
Consider naming backup agents too. Your first choice might not be available when the time comes. Having alternatives prevents problems down the road.
Think about practical skills as well. Managing finances requires different abilities than making healthcare decisions. You might need different people for different roles. Geographic location matters too – having an agent who lives across the country might create practical difficulties when quick decisions are needed.
Why Powers of Attorney Matter
Without a power of attorney, your family might face serious problems. If you become incapacitated, no one can legally handle your affairs. Your loved ones might have to go to court to get permission.
Court proceedings take time and cost money. They also become public records. A power of attorney avoids all of this hassle. The guardianship process can take months and cost thousands of dollars, during which time your bills might go unpaid and important financial decisions might be delayed.
Powers of attorney are essential tools for protecting yourself and your family. They ensure someone you trust can step in when you cannot act for yourself. The key is creating them before you need them. Like insurance, you hope you'll never need to use them, but having them in place provides invaluable peace of mind for both you and your loved ones.
