Financial Power of Attorney
A Financial Power of Attorney is a legal document that allows one person, known as the principal, to authorize another trusted individual, known as an agent or attorney-in-fact, to handle certain financial and property-related matters on their behalf. Depending on the authority granted, a Financial Power of Attorney may allow the agent to assist with tasks such as managing bank accounts, paying bills, handling real estate transactions, overseeing investments, or conducting other financial activities.
Financial Powers of Attorney are commonly used as part of a comprehensive estate plan and can help ensure that important financial matters continue to be managed if an individual becomes unavailable, incapacitated, or simply wishes to authorize another person to act on their behalf.
Common Types of Financial Powers of Attorney
General Power of Attorney
A General Power of Attorney grants broad authority to an agent to manage a wide range of financial and property matters. In most cases, this authority ends if the principal becomes incapacitated.
Durable Power of Attorney
A Durable Power of Attorney is similar to a General Power of Attorney but includes language that allows the authority to continue even if the principal later becomes incapacitated. This is one of the most commonly used estate planning documents.
Limited (Special) Power of Attorney
A Limited Power of Attorney grants authority for a specific task, transaction, or period of time. For example, an individual may authorize an agent to complete a real estate transaction or manage a particular financial matter while they are unavailable.
Springing Power of Attorney
A Springing Power of Attorney becomes effective only upon the occurrence of a specified event, such as a determination of incapacity. The document defines the conditions that must be met before the agent's authority begins.
What a Financial Power of Attorney Can Do
Depending on the authority granted by the document, a Financial Power of Attorney may allow an agent to:
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Manage bank and financial accounts
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Pay bills and ongoing expenses
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Handle certain real estate transactions
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Manage investments and financial assets
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Conduct business-related financial activities
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Communicate with financial institutions
What a Financial Power of Attorney Generally Cannot Do
A Financial Power of Attorney does not typically allow an agent to:
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Create or modify a will on behalf of the principal
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Vote in public elections for the principal
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Perform duties that are strictly personal in nature
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Act outside the authority granted in the document
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Continue acting after the principal's death
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Because every individual's circumstances are different, Financial Powers of Attorney are often prepared as part of a broader estate planning strategy designed to help ensure that financial affairs can continue to be managed when needed.