A power of attorney (POA) is one of those deceptively small documents that can deliver enormous peace of mind. Essentially, it allows you as the “principal” to appoint someone you trust to be an agent who will act on your behalf. Another name for this agent is “attorney in fact.” The actions this person is empowered to take include managing your finances, selling property, handling legal matters, or making medical decisions if you’re ever unable to do so yourself. One of the greatest benefits to having a POA is that it helps you avoid court-appointed guardianships or conservatorships. That’s not necessary because you have already empowered a person you trust to step in. But when would I need a power of attorney? And, how do I create a valid power of attorney? Read on to find the answers to your questions, and to learn more about powers of attorney.
Why would you need a POA?
Life is unpredictable! That’s one fact that everyone can agree on. You can get ahead of the curveballs and keep your life or business running smoothly by signing a POA. There are many situations where you could benefit from a POA. In business, a general POA allows an employee to enter into contracts, spend money, sell property, and take other actions on behalf of the principal. Other situations where signing a POA might be a good idea is if you’re traveling abroad, facing a mental or emotional health crisis, or gearing up for a lengthy recovery.
In these situations, a POA gives someone you trust the legal ability to keep your affairs going if you’re unable to. Imagine needing to sign papers for a house closing or pay a bill while you’re lying in a hospital bed unable to accomplish these important tasks. With a valid POA, your agent can handle it. This document is as practical as it is caring. It shows you’ve thought about how to protect yourself and your family when the unexpected happens.
Types of POAs
Not all POAs are the same. Let’s take a look at the various types of Power of Attorney, and what situations call for each one.
General POA
A General POA is the “do-it-all” option. This type of POA grants broad powers immediately. But, unlike a durable POA, a general POA ends if the principal becomes incapacitated. The attorney-in-fact has the power to act on a wide range of matters including business transactions, assisting an elderly person with managing their estate or financial matters like paying the bills or selling a property, or helping principals who need help with overseas matters. This kind of POA can be helpful if you’re traveling abroad for a few months or simply want someone to manage your life while you’re temporarily incapacitated.
Limited POA
As its name suggests, the powers granted through a limited POA are only related to a specific set of duties or a single task, and for a specific time frame. Another name for limited POAs is a “special POA.”The task could be anything from selling your car to managing a single real estate transaction. Maybe you’re closing on a house while hiking the Andes, or need someone else to file your taxes while you’re off the grid. Limited POAs are great for task-based delegations without handing over the whole financial kingdom.
Durable POA
A durable POA continues to work even once the principal becomes incapacitated. Another term for durable power of attorney is, “statutory power of attorney.” Many states now presume a POA is durable unless worded otherwise. Agents with a durable power of attorney can act on a principal’s behalf in many areas of life including medical care, legal matters, and finances. This type of POA is often used as part of long-term planning, especially for aging parents or people with chronic illnesses. In fact, many estate planners recommend a durable POA as essential as a will or a good bottle of bourbon in your emergency kit.
Springing POA
A springing POA only “springs” into effect under certain conditions at a later date. A common triggering event for a springing POA is when there’s proof that the principal is mentally or physically impaired. The POA itself should explain exactly what qualifies as proof (i.e. at least two medical doctors confirm the principal’s incapacitation). Be aware that proving incapacity can sometimes lead to delays, especially in emergencies. This is why many attorneys prefer a durable POA which activates immediately and avoids bureaucratic hold-ups. However, you might have no need or desire for an agent to act on your behalf immediately. But, you’d also like the peace of mind knowing that if you’re ever incapacitated, someone you trust would be able to handle your affairs. A springing POA is a thoughtful way to ensure you have control over exactly when POA powers kick in.
Medical POA
A medical POA is sometimes rolled into Advance Healthcare Directives, and usually becomes effective when the principal becomes incapacitated. It allows the agent to make medical decisions on behalf of the principal. This agent will be able to have access to the principal’s medical records, refill prescriptions, talk with medical professionals, and approve or deny tests and medications. Situations that call for a medical POA include end-of-life care, surgeries, or medication plans. It’s the legal equivalent of giving someone a voice when you can’t speak, and it’s often accompanied by a living will that outlines your treatment preferences.
Financial POA
A financial power of attorney lets someone else manage your money when you can’t or just don’t want to. It’s a legal document that authorizes a trusted person to handle financial tasks on your behalf. Some of the tasks can include paying bills, depositing checks, managing investments, buying or selling property, and even filing taxes. There are different types of financial POAs. A general financial POA gives your agent broad authority over almost everything money-related, while a limited financial POA might just authorize them to do one specific task like selling your house while you’re on a remote yoga retreat. If you want the POA to keep working even if you become incapacitated, you’ll need to make it a durable financial POA.
Requirements for a valid power of attorney
The Uniform Power of Attorney Act (UPOAA) was designed to clean up the messiness that often comes with inconsistent state laws around powers of attorney. Introduced by the Uniform Law Commission in 2006, it sets out a standardized framework to help ensure that a POA works when and where it’s needed. No matter if you’re dealing with banks, hospitals, or family members across state lines, you can reference the UPOAA to guide the way. Not all states have adopted the UPOAA yet, but many have, including big ones like Texas, Florida, and Pennsylvania.
Among other things, the UPOAA clarifies how and when a POA becomes effective, defines the agent’s responsibilities and limits, and includes safeguards against financial abuse. One of its standout features is that it gives third parties, like financial institutions, more reason to honor a valid POA instead of dragging their feet or rejecting it outright. This is important because no one wants to be stuck in legal limbo when decisions need to be made fast. State requirements for valid POAs vary, but they usually require:
- Written form
- Your signature, or someone signing on your behalf under your direction
- Notarization or signed before witnesses (more common with financial POAs)
- Clear language stating whether it’s durable or springing
If you’re creating a POA today, chances are your attorney will follow the UPOAA’s best practices even if your state hasn’t officially adopted it. This is because the statute offers clarity, consistency, and court-tested credibility.
POA agents have a fiduciary duty
Once someone becomes your agent, they step into a fiduciary role, which means they must act in your best interests always. They also must act with honesty, care, and loyalty. An agent cannot engage in sneaky self-dealing, cannot mix your money with theirs, and cannot use their role to benefit themselves at your expense. If they break this duty, courts can step in. Agents can be removed, sued, and even criminally charged in some states.
Under the UPOAA, there are mandatory duties every agent must follow. These include keeping accurate records, preserving your estate plan to the fullest extent possible, and cooperating with those caring for you. Some states, like California , New York, and Texas, have their own strong provisions that allow family members, caregivers, or even financial institutions to raise red flags if they suspect abuse. Courts in these states can require the agent to account for every dollar they’ve touched.
Many POA documents also include safeguards by design like requiring two people to act jointly, mandating regular financial reporting to a third party, or limiting certain powers altogether like gifting money or changing beneficiaries. And finally, the principal, or their loved ones, have the nuclear option of revoking the POA. As long as you’re mentally competent, you can tear it up and start fresh with a new agent.
POA abusers have consequences
Abuse isn’t just unethical, it’s illegal. Courts can revoke the POA, force repayment of stolen assets, and even impose criminal penalties if abuse is found regarding a POA. Take Texas, for example. An agent who steals or misuses funds may face civil liability or criminal charges under Section 31.03 of the Texas Penal Code and related provisions (Tex Penal Code §31.03). Sadly, abuse happens in all areas of life where money is involved. It’s possible that someone wielding a POA could attempt to empty accounts or re-route inheritance.
Fortunately, courts closely scrutinize POAs. If you suspect foul play, you can challenge the POA in court. Agents have even been removed through petitions, and courts can appoint guardians instead. So while handing over the keys to your financial life is no small decision, a thoughtfully crafted POA, with the right person in the driver’s seat and legal guardrails in place, can offer peace of mind and financial security for your estate. Discuss your concerns about POA abuse with an attorney in your area, and make sure your POA is drafted with safety in mind.
The bottom line on POAs
A power of attorney is a powerful planning tool that puts someone you trust in charge of your affairs if you can’t do so yourself. Talk with an attorney in your area who has experience with POAs, and figure out which type of POA is right for you and your situation. The most important decision you’ll make is who you appoint as the agent or “attorney in fact.” It must be someone you trust completely. Ideally, this person is responsible and has a general understanding of your financial or medical situation, and knows your wishes. Whether your goal is to avoid court intervention, keep your finances intact, or ensure medical wishes are honored, a well-crafted POA is a cornerstone of adulting and caring for those you love.
Gregory Gilston is a family law attorney located In the Greater Philadelphia area. Attorney Gilston is licensed to practice law in Pennsylvania and services clients in Bucks, Chester, Delaware, Montgomery, and Philadelphia counties.
Attorney Gilston is currently on the executive board of the Doris Jonas Freed Inn of Court, and is an active member of the Philadelphia Bar Association’s Family Law Section and Alternative Dispute Resolution subcommittee, the Montgomery County Bar Association’s Family Law Section, Young Lawyer’s Section, and Pro Bono Committee. He is also an active contributor to Family Lawyer Magazine and the Montgomery County Bar Association’s quarterly publication.
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