A power of attorney is a legal agreement between two people in which one person is able to act on behalf of the other person. For example, you might want to give someone a power of attorney to sign documents for you in a real estate transaction. Or an elderly person may want to give someone continuing authority to act in making health care decisions.
The two people in a power of attorney form:
- The Principal is the person giving the authority to act on his or her behalf.
- The Agent, also called the attorney-in-fact, is the person receiving the authority to act.
The agent in any power of attorney must agree to act solely in the interest of the principal and to avoid any conflicts of interest.
Powers of Attorney are governed by state laws. Before you use a power of attorney form, make sure it complies with the laws of your state. To find the power of attorney law in your state search on [state name] and "power of attorney."
What are Different Types of Power of Attorney Forms?
- A General Power of Attorney gives your agent the same powers yourself, for all legal and financial matters.
- A Limited Power of Attorney gives your agent power for specific tasks and for a specific period of time. It might be used for the sale of stock or a motor vehicle or for a real estate transaction.
- A Durable Power of Attorney form authorizes the agent to act on behalf of the principal if this person becomes incapacitated or unable to take care of his or her own activities. The most common is the durable power of attorney for healthcare.
You can have several attorneys-in-fact with different power of attorney forms. For example, you might have a durable power of attorney for healthcare and limited power of attorney for someone to handle your investments.
- Springing vs. Non-springing powers of attorney. A springing power of attorney becomes effective (springs into being) on a certain date. For example, it might take effect if the principal is declared incompetent. A non-springing POA becomes effective when the document is signed. Some states (Florida, for example) don’t allow springing power of attorney forms.
When Does a Power of Attorney End?
All powers of attorney, both limited and durable, end that the death of the principal or on a specific date stated in the form. You can revoke (cancel) a power of attorney by signing a form any time as long as you are mentally competent.
What Must be Included in a Power of Attorney Document?
The basic elements that must be included in any power of attorney. Use this to think about the specific details you want to include:
- Title the form. Giving the POA a specific title helps identify it so there’s no confusion. Ex: “Durable Power of Attorney for Financial Management”
- Date the form. This should be the date the document is signed. If you are giving your agent powers that begin on a different date, include that date under the specific powers.
- Identify the principal and the agent, including the address and phone number. The information should make it easy for anyone to identify the two parties.
- Describe the specific powers. For a limited POA, list the specific acts that you are authorizing your agent to perform, like “Care for my cat named _____ from X date to X date.” Be sure to identify any people or animals specifically.
For a durable power of attorney for financial matters:
Here you may want to identify and include or exclude specific types of financial transactions, such as real estate, banking, government and retirement benefits, estate, gifts and trusts, property, insurance, claims and litigations (court cases), taxes investment, and business operations.
- A discussion of how the powers can be revoked or when they end, including specific dates when the POA expires. You can also say, “...when the POA responsibility has been completed.”
- Revoke previous powers of attorney. Revoke any previous powers of attorney you have given for this specific type of POA.
- Identify the state law under which the POA operates.
- Compensation. Specify in the document if you want to pay your agent for duties or expenses or both.
- The Agent must accept the assignment. Some states require the agent to specifically accept the duties.
- The principal and the agent must sign. In most states, they must sign in front of witnesses, and then the witnesses must sign. The witnesses should not be someone related to either of the parties and they must be identified, usually by an address or cell phone number.
- The POA must be notarized (signed by a notary public).
This language is not intended to be used to prepare a power of attorney. You should always have an attorney prepare any legal document, to make sure the language says what you want it to and that it complies with the law in your state.