What is power of attorney?

Living wills. Estate planning. Healthcare proxies. Sometimes planning for aging care can feel like you need a degree from a law school. This can be especially true when authorizing a power of attorney (POA).

Well, we’re here to help. Let’s go through what a POA is, what it can do, and why it can be important when planning for aging care.

Important note: This article is for general informational purposes only and isn’t meant to offer legal advice. Because POA rules can vary by state and situation, we’ll be focusing on the broad U.S.A. terms and POA definitions. It’s important to note that each state has its own POA laws, regulations, and terminology. You may want to speak to a qualified attorney about what’s right for you or your loved one.

What is a Power of Attorney?

A power of attorney is a legal document that authorizes one person, known as the agent or attorney-in-fact, to act on behalf of another person, known as the principal. The agent has the ability to make legal, financial, or medical decisions on behalf of the principal. This power can be either very specific and limited to certain actions, or very expansive, depending on how it is written. It’s typically used when someone becomes unable to manage their own life and affairs due to an illness, injury, or cognitive decline.

Types of POA

When establishing POA, there are different types you can choose based on your loved one’s needs and goals. Let’s take a look at some of the most common types:

• General POA is used when a principal is able to take care of their own affairs, but for whatever reason chooses or prefers not to. Maybe they spend their winters out of the country, and they want someone in their home country to manage their finances and property if the need arises. General POA typically lasts for a limited time and can usually be revoked at any time. Because it does not remain in effect after incapacity, general POA may not be the best option for aging care planning.

• Limited POA allows an agent to perform only specific tasks on behalf of the principal. This could be something like managing a retirement account or selling a property. Just like general POA, limited POA ends if the principal is incapacitated.

• Durable POA gives the agent the power to make legal and financial decisions for the principal. This document often goes into effect immediately, is revocable, and continues if the principal becomes incapacitated. This POA may be ideal if the agent needs to continue managing financial and legal matters. This type of POA will generally only end when the principal dies.

• Medical POA, also known as a healthcare POA, or healthcare proxy, is a type of durable POA that gives the agent the power to make medical decisions, communicate with healthcare providers, review treatment options, and make decisions based on the principal’s wishes if the principal is incapacitated.

• Springing POA is a type of sub-document within the durable POA and becomes effective only after specific conditions are met. It states conditions under which the principal is considered incapacitated, which triggers the durable POA. This may be ideal if the person wishes to maintain full control of their affairs until a clearly defined event occurs.

Why POA matters

The future might seem far off, but things may change. At the very least, POA can become essential after entering end-of-life care. Almost everyone can benefit from having a POA document, even young people. If you are ever in an accident, having a durable POA document may help your designated agent make decisions for you, or handle money and property while you’re incapacitated. Here are some common reasons older adults might need POA documents:

• Chronic illness: POA may help take certain responsibilities off your plate while you focus on a long-term health crisis.

• Planned or emergency surgery: Giving someone medical POA may help them make healthcare decisions for you while you’re under anesthesia or in recovery.

• Memory issues: Older adults with memory problems, especially those diagnosed with dementia or Alzheimer’s, may benefit from a POA. This will allow their agent to handle their affairs, even if they’re as simple as making sure that bills are paid on time.

The benefits of choosing a POA

One of the biggest benefits of POA is that you can choose who to give this power to. Without a POA document specifying a different agent, legal and medical decisions typically fall to your next of kin.

For example, some may be too young or live too far away to effectively manage POA. Perhaps you would prefer to give a sister, who is a doctor, medical POA, but designate a close friend (who is also a Certified Public Accountant) financial POA. There are many ways to customize this legal document, and you don’t have to choose from family members when designating POA. You can even choose professionals such as lawyers and accountants, but they will likely charge you for their work as your POA agent.

Your family has different dynamics and needs than others, so creating a POA document will help ensure that you have people you trust in charge of your affairs if you need them.

How to choose a POA for an older adult parent

When guiding your parent through the selection of a POA, it’s important to have open communication and respect for your parent's agency. Start by having some candid discussions about their preferences, values, and concerns. In some cases, it may make sense to appoint separate individuals for medical, financial, and legal affairs, tailoring each role to the specific skills and values alignment of each person.

For medical decisions, choosing a family member who will respect the wishes and treatment preferences when it comes to medical care is essential. Financial matters often benefit from the oversight of someone with financial acumen, while legal affairs may be entrusted to an individual with great administrative skills. Ultimately, the goal is to create a comprehensive and well-rounded support system that aligns with the parent's wishes, providing them with peace of mind as they navigate the challenges of aging.

How to get a POA

Once you designate a POA and discuss your wishes and preferences, the next step is to make it legal. If the agent and principal agree, you need to put it in writing, and there are a few different ways to do this.

Download the right POA forms

You can download POA templates and find websites that will help you fill them out, but it may be helpful to have a professional prepare these documents, especially as there is no standard POA form for all 50 states, and each state can have different requirements. Additionally, some forms may be better than others. Double check to make sure you are downloading forms with necessary requirements and language.

Work with an elder law attorney

Find an elder law attorney that specializes in family law or estate planning: If you can’t afford legal fees, look into whether you qualify for pro bono legal services, or check your state’s bar association to see if any local attorneys provide POA for free or at a discounted rate. An attorney will be able to help you make sure your POA satisfies your state’s requirements and that it reflects your wishes clearly. Make sure that you identify the parties, specify the powers the POA will grant to the agent(s), and that the POA states whether it is limited or durable.

Notarizing, recording, and filing

These steps vary widely from state to state, but many states require that POAs be notarized. Filing with the county might be optional, but many estate planners/attorneys recommend a public record of the POA be created. Some states require getting POA documents filed with the local government before they can be considered valid.

How much can a POA cost?

Costs vary depending on how the document is prepared. Doing it yourself with forms online? It can cost as little as the fee to get the documents notarized. Using an attorney to help you prepare all the documents? You may be looking at larger legal fees. The advantage of using an attorney to get a POA is that they are professionals who know exactly how to prepare the documents.

Many attorneys also offer POA documents as part of a broader estate planning package that may also include:

• A will

• Advance directives

• Healthcare planning documents

• Other legal planning tools

For many families, investing in professional guidance may provide valuable peace of mind. Explore both options by looking at forms online and talking to an elder law attorney.

Consequences, risks, and responsibilities to consider when naming a POA

As we covered in the benefits section, there are a lot of positives about granting someone POA. At the same time, granting authority over your health decisions, finances, and other important matters requires careful consideration.

As you explore the process, keep in mind all the consequences, both positive and negative, risks, and responsibilities that it creates.

Responsibilities of being a POA agent

Accepting the role of POA agent is an important commitment. While the position allows someone to help a loved one, it also creates legal and ethical responsibilities.

All agents should:

• Understand and stay within the authority granted

• Act in the principal’s best interests and follow their known wishes

• Keep accurate records and avoid conflicts of interest

• Keep funds separate and pay bills and debts with the principal’s money—not your own

• Sign on the principal’s behalf, not as a personal guarantor

• Seek professional advice when needed

Good intentions alone are not always enough. Careful documentation and informed decision-making help protect both the principal and the agent.

Risks of being POA

Being a POA agent for someone can be an intimidating prospect: it means someone is putting an immense amount of trust onto your shoulders and, potentially, a lot of work, some of which can be emotional. There are also some real risks to being POA for someone else such as:

• Accidentally making yourself liable for decisions/transactions: In trying to manage your loved one’s healthcare or financial matters you might encounter demands from banks or other institutions. Make sure it’s clear who is responsible for what when it comes to finances.

• Mismanaging financial affairs: Even with the best intentions, managing someone else’s finances can be complicated. Depending on the authority granted in the POA, an agent may be able to sell property or manage significant funds — and a mistake or unclear decision could create financial losses or concerns among family members. Take the time to understand the responsibilities and limits outlined in the POA documents, and ask for help when something is unclear. Guidance from a financial or legal professional can help protect both you and your loved one.

• Going beyond the authority granted in the POA: Even when you’re trying to honor your loved one’s wishes, a request may fall outside what the POA allows you to do. Take time to understand the document’s rules and limits, and check them before making important decisions. If your loved one asks you to take an action that isn’t permitted — or if memory or cognitive changes make their wishes unclear — always pause and seek guidance from a legal professional.

What POA does not cover

POA grants significant authority, but it is not all encompassing and can have its limits. Generally, POA does not:

• Create or change a will

• Revoke an existing will

• Vote on behalf of another person

• Require someone to move to assisted living or other senior housing

POA, living will, and advance directives: what’s the difference?

There are a lot of parts to estate planning and POA is just one of them. Let’s take a look at some of these definitions. Generally:

• POA gives another person the power to make decisions and take action on your behalf while advance directives provide a clear understanding of your healthcare wishes.

• A living will informs medical professionals and your family what treatments you do and do not want, in case you are unable to tell them yourself.

• Advance directives are sometimes called healthcare directives: you'll find that the terminology for these and living wills varies from state to state.

Can you get POA if your parent has dementia?

Typically, no. If your parent has been diagnosed with dementia or Alzheimer’s, or is otherwise cognitively impaired, it is usually too late to have them sign POA documents, as they likely legally cannot sign. Instead, you may want to explore guardianship or conservatorship.

How to talk to your parents about creating a POA

Imagine if you were deciding whether to give someone control of your medical and financial affairs. Even if they are a trusted family member, it's still a huge decision that requires thoughtful communication and planning.

It’s important to think about the decisions your parents are making when you talk to them about POA.

Consider focusing on these points:

• A POA gives them the ability to choose who will help if needed

• Documents can be customized to reflect their wishes

• Planning now can help prevent stressful decisions in the future

• A POA can reduce the likelihood of expensive court proceedings

Most importantly, approach the conversation as a partnership rather than a takeover. Respect, patience, and empathy can go a long way toward helping parents feel comfortable discussing future plans.