What is the authority of a power of attorney?
08 Apr What is the authority of a power of attorney?
Posted on 09:07h
In Power of Attorney
A Power of Attorney (POA) allows you to give someone whom you trust the authority and responsibility to make decisions in your name. What is the actual authority of a power attorney? It depends on what type of POA you have, the language in the document and the laws of your state. It’s important to know what a POA can and cannot do if you’re considering setting one up or if you’ve already been designated as such.
Types of Power of Attorney
General vs. Durable Power of attorney
A general power of attorney gives broad authority in financial, business and legal matters. Your agent can sign contracts, manage your bank accounts, and oversee your business dealings. This power will end if you become incapacitated. If no backup plan has been made, important issues can be left in the air. The
A durable powers of attorney remains in place, even if you are unable to make decisions yourself. It’s a crucial part of long-term planning because it ensures that someone trusted can take over your financial or medical affairs if you become incapacitated. Limited vs. Parental POA
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limited power is temporary and only applies to certain tasks, such selling a house or managing a specific financial matter. A limited POA could be used to give someone the authority to sell your home while you are overseas. This can be helpful during extended travels, military deployments, or medical emergencies where a parent may not be able to make decisions. However, this authority is temporary and is not the same as legal guardianship.Power of Attorney vs. Conservatorship
A power of attorney is something you create voluntarily, while you are mentally competent. You can choose your agent, and define their powers. You can also revoke a power of attorney at any time.
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conservatorship, on the other hand, is based on a court decision. If someone becomes incapable of managing their affairs and has not set up a durable Power of Attorney in advance, a court can appoint one. The power of attorney can be used to avoid the stress, cost and complications that come with a conservatorship. Establishing a POA in advance can help avoid the stress, cost, and potential complications of a court-appointed conservatorship.The Powers and Limitations of a POA
What a Power of Attorney Can DoDepending on the type of POA, an agent may be authorized to handle a variety of responsibilities, including:Financial transactions
– They will have legal access to your bank accounts and be able to do things like deposit checks and transfer funds.
Pay bills and taxes
– Granting this ability will ensure that financial obligations like mortgage payments are made on time.
- Buy or sell real estate – If you choose, your agent can sign contracts and handle real estate transactions.
- Make medical decisions – If designated in a healthcare POA, the agent can make medical treatment choices.
- Oversee business operations – You can allow your agent to manage business affairs, sign agreements, and make executive decisions.
- See a full list
- of POA powers. The powers and limitations of a POADepending on the type of POA, an agent may be authorized to handle a variety of responsibilities. These include:
Financial transactions – They will have legal access to your bank accounts and be able do things like deposit checks and transfer funds.Buy or sell real estate
– If designated in a healthcare POA, the agent can make medical treatment decisions.
Oversee business operations
- 10101010101010101010101010101010101010101010101010101010 a10101010101010101010101010101010101010101010101010101010 An agent cannot:Change or override the principal’s will
- – Estate planning decisions remain solely with the principal. Make decisions after the principal’s death
- – A POA becomes void once the principal passes and the executor of the will takes over.Transfer their authority to someone else
- – The agent cannot delegate their role to another person.Act against the principal’s best interests
– All actions must be made in the principal’s favor. Misuse of power can result in legal consequences.Explore the full list of POA restrictions here
. Can a Power of Attorney change a Will
One of many misconceptions about POAs is that the agent can alter a will. This is simply not true. You, as the principal can make any changes. You must notify all relevant parties if you need to revoke or update a POA document. If you’re no longer mentally competent, your existing will remains in effect.How to Change a Power of Attorney
If you ever need to
update or revoke a POA document, you need to:Draft a written revocation
- – This legally cancels the previous POA.Notify all relevant parties
- – Banks, healthcare providers, and any institutions that relied on the POA must be informed.Create a new POA
- – If you’re replacing an old POA, a new document should be drafted and signed according to state laws.It’s a good idea to review your POA documents regularly, especially if you’ve had major life changes such as marriage, divorce, or changes in health. Keep your POA updated to ensure the right person will always be in charge.
Secure Your Family’s Future with Estate Planning
Appointing a durable power of attorney can help ensure that your affairs will be handled according to your wishes, if you’re ever unable to make medical or financial decisions yourself. This step can bring peace of mind but only if it is set up correctly. Since the early 1970s,
Phelps LaClair
has been helping families with their estate-planning needs. We want to make sure that your wishes are honored, and your loved ones protected. We can help you with the process, whether you’re creating a new POA document or making changes to a current one. Contact us to schedule a consultation. We will answer all your questions about powers of attorney. Images under creative commons licence – commercial use (04/08/25). Photo by Cottonbro Studio.
