A power of attorney is a document—typically prepared by a lawyer—that names someone you trust as your agent to make property, financial, and other legal decisions on your behalf. Rules about powers of attorney—including limitations on what an agent can and cannot do—vary from state to state. You can also set customized limits on what your agent is allowed to do on your behalf. Generally, you can give your agent the ability to:
- Collect your Social Security benefits
- Use your money to pay your bills
- File your taxes
- Operate your small business
- Conduct your banking transactions
- Manage your investments
- Buy, sell, and/or manage your property
- Manage your retirement accounts
- Hire someone to represent you in court
- Give gifts or donations on your behalf
You may also give your agent the ability to make certain health care decisions for you, such as:
- Managing your funds to pay for medical treatments or other care
- Choosing or changing your health insurance plan
- Appealing coverage denials
Note: You may need to name someone your health care proxy if you want them to be able to make medical decisions on your behalf, not just decisions related to insurance and payment. You can appoint the same person as your health care proxy and power of attorney, but you may be required to fill out two separate documents.
Power of attorney documents are valid until you revoke your agent’s power, become incapacitated and unable to communicate due to a temporary or permanent illness or injury, or die. If want your agent to make decisions on your behalf when you are incapacitated, you have the option of creating a durable power of attorney document. Your agent will still be bound by the decision-making restrictions you specify in the document.
It is important to know that you do not give up the right to make decisions for yourself by appointing an agent. However, any decision your agent makes has the same legal weight as if you had made it yourself. You should periodically review your power of attorney document and can make changes at any time to better suit your needs, including (but not limited to) appointing a new agent or changing your agent’s permissions and/or restrictions.
Power of attorney documents may let you name a second person as your backup agent if your primary agent cannot fulfill their duties. It is a good idea to name a backup agent, if possible.
Consult a lawyer to create a power of attorney document. The document needs to meet state requirements, be tailored to your individual needs, and be drafted with precise legal language.