Creating a power of attorney raises a lot of questions. How much does it cost? Do I really need one? Can my agent do whatever they want with my money? We have compiled answers to the most frequently asked questions about powers of attorney to help you understand the process and make informed decisions.
General Questions
What is a power of attorney?
A power of attorney (POA) is a legal document that allows you (the principal) to designate another person (the agent or attorney-in-fact) to make decisions and take actions on your behalf. Depending on the type of POA, your agent can manage your finances, make healthcare decisions, or handle other specific matters.
Do I really need a power of attorney?
Yes. Every adult over 18 should have at least two powers of attorney: one for financial matters and one for healthcare decisions. Without a POA, if you become incapacitated due to illness, injury, or cognitive decline, nobody has the automatic legal authority to manage your affairs. Your family would need to go through a court-supervised guardianship process, which is expensive, time-consuming, and stressful.
What are the main types of power of attorney?
The main types include a general POA (broad financial authority), a limited or special POA (authority for specific tasks), a durable POA (remains effective during incapacity), a non-durable POA (terminates upon incapacity), a springing POA (takes effect only when a triggering event occurs), and a medical POA or healthcare proxy (authority over healthcare decisions).
What is the difference between a durable and non-durable POA?
A durable POA remains effective even if you become mentally incapacitated. A non-durable POA automatically terminates when you lose mental capacity. For most planning purposes, a durable POA is recommended because incapacity is the very situation you are preparing for.
Can I have more than one power of attorney?
Yes. It is common to have both a financial POA and a medical POA, and you can name different agents for each. You can also create multiple POAs for different purposes, such as a general POA for overall financial management and a limited POA for a specific transaction.
Choosing an Agent
Who should I choose as my agent?
Choose someone you trust completely, who is responsible and organized, who understands your values and wishes, and who is willing and able to serve. Common choices include a spouse, adult child, trusted friend, or professional fiduciary. The most important quality is trustworthiness.
Can I name more than one agent?
Yes. You can name co-agents who serve simultaneously, or successor agents who serve sequentially (the successor steps in only if the primary agent cannot serve). Most estate planning professionals recommend naming successor agents rather than co-agents, as co-agents can create practical complications.
Can my agent be held liable for their actions?
Yes. An agent has a fiduciary duty to act in your best interest, keep accurate records, avoid conflicts of interest, and manage your affairs responsibly. If they fail to meet these duties, they can be held legally liable and may face civil or criminal penalties.
Can I change my agent?
Yes. As long as you are mentally competent, you can revoke your existing POA and create a new one with a different agent at any time.
Does my agent get paid?
Your POA can authorize your agent to receive reasonable compensation for their services. Many family members who serve as agents do not charge for their services, but professional fiduciaries and agents who spend significant time managing complex affairs may be entitled to payment.
Creating and Executing a POA
How much does a power of attorney cost?
Costs vary depending on how you create the document. Using a service like mypoa.ai is a straightforward and affordable option, with documents tailored to your state's requirements. Notarization typically costs a modest additional fee, ranging from a few dollars to around twenty-five dollars per signature.
Do I need a lawyer to create a power of attorney?
No. You are not legally required to hire a lawyer. Services like mypoa.ai generate state-specific documents that comply with your jurisdiction's requirements. After generating your documents, you simply follow the included execution instructions for proper signing, witnessing, and notarization.
Does my power of attorney need to be notarized?
Requirements vary by state, but notarization is required for most financial POAs and is strongly recommended even when not required. Banks and other institutions are much more likely to accept a notarized POA. For real estate transactions, notarization is almost always required.
Do I need witnesses?
Witness requirements vary by state. Many states require one or two witnesses for a POA, and some impose restrictions on who can serve as a witness (for example, the agent typically cannot also be a witness). Check your state's specific requirements.
Can I create a POA online?
Yes. Many people create their POA using online services that guide them through the process and generate state-specific documents. However, the document still needs to be printed, signed, witnessed (if required), and notarized to be legally valid. An entirely digital POA without proper execution may not be enforceable.
Powers and Limitations
What can my agent do with a financial POA?
Depending on the powers you grant, your agent can manage bank accounts, pay bills, handle investments, file taxes, buy or sell real estate, manage business operations, handle insurance matters, and more. The specific powers are defined in the document.
What can my agent NOT do?
An agent generally cannot change your will, vote on your behalf, make decisions after your death, or perform acts that are inherently personal (like getting married on your behalf). They also cannot act outside the scope of powers granted in the document and must always act in your best interest.
Can my agent give themselves my money or property?
An agent should not engage in self-dealing unless the POA specifically authorizes gifts to the agent. Even when gift-making authority is included, the agent must act in the principal's best interest and keep detailed records. Unauthorized self-dealing is a breach of fiduciary duty and can result in legal action.
Does a POA give my agent access to my medical records?
A medical POA may provide some access to medical information, but HIPAA privacy laws can create barriers. For the most reliable access, create a separate HIPAA authorization alongside your medical POA that specifically authorizes your agent to receive your protected health information.
Can my agent sell my house?
Yes, if the POA specifically grants authority over real estate transactions. The POA must usually be notarized and may need to be recorded with the county recorder's office. Some states require the property to be specifically identified in the POA.
Duration and Revocation
When does a power of attorney take effect?
An immediate POA takes effect as soon as it is signed. A springing POA takes effect only when a specified triggering event occurs, such as the principal's incapacitation. Most estate planning professionals recommend an immediate POA for reliability and ease of use.
How long does a power of attorney last?
A POA remains in effect until it is revoked by the principal, the principal dies, the specified expiration date passes (if one is included), or the specified task is completed (for a limited POA). A non-durable POA also terminates upon the principal's incapacity.
Can I revoke my power of attorney?
Yes. As long as you are mentally competent, you can revoke your POA at any time by creating a written revocation, notifying your agent, notifying all third parties who have been relying on the POA, and retrieving original documents from your agent.
Does a POA survive my death?
No. A power of attorney terminates immediately upon the principal's death. After death, the executor of your estate (named in your will) takes over managing your affairs.
Special Situations
What if I move to a different state?
If you move to a new state, your existing POA may still be valid, but there is no guarantee that institutions in your new state will accept it without question. It is advisable to create a new POA that complies with your new state's laws.
Can a bank refuse my power of attorney?
Unfortunately, yes. Banks sometimes refuse to honor valid POAs due to internal policies, concerns about the document's age, or unfamiliarity with the format. Many states have enacted laws requiring banks to accept properly executed POAs within a reasonable time frame. Presenting your POA to your banks before you need it can help prevent problems.
What about digital assets?
Traditional POAs may not adequately address digital assets like email accounts, social media, cryptocurrency, and online banking. Include specific digital asset provisions in your POA and create a separate digital asset inventory with access information stored securely.
Do I need a separate POA for each state where I own property?
Not necessarily, but it can be helpful. A POA executed in one state is generally recognized in other states, but there can be practical complications. If you own property in multiple states, consider creating separate POAs that comply with each state's requirements, or create a single POA that meets the most stringent requirements of all relevant states.
Can someone with dementia create a power of attorney?
It depends on the severity of the condition. A person must be mentally competent to create a valid POA, meaning they must understand what the document is and what powers they are granting. In the early stages of dementia, a person may still have sufficient capacity to create a POA, but this should be evaluated carefully, ideally with a physician's capacity assessment.
Take the Next Step
Having questions about power of attorney is completely natural, and getting answers is the first step toward protecting yourself and your family. The most important thing is to take action before you need the document, because once you lose capacity, the opportunity to create a POA on your own terms is gone.
mypoa.ai can help you create a power of attorney tailored to your state's requirements, guiding you through each decision with clear explanations and prompts. Your download includes detailed execution instructions for proper signing, witnessing, and notarization specific to your jurisdiction.