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How Power of Attorney Works?

Person using debit card at ATM. They have figured out how power of attorney works.

Power of Attorney (POA) is an important legal tool that allows you to appoint someone you trust to manage your affairs if you are unable to do so yourself. It can provide assurance that your finances and medical decisions are in the hands of a reliable person. Learn more about how Power of Attorney works, and what types of situations it is used for.

Understand the Basics of Power of Attorney.

Power of Attorney (POA) is a legal document that appoints an individual to manage the decision-making processes for another individual. The person appointed is known as the agent, attorney-in-fact, or proxy. The document allows the agent to make decisions on behalf of their principal such as medical care, finances, and other legally binding activities. The principal has complete control over who they select as their power of attorney and what responsibilities actually fall under this title.

Types of Power of Attorney.

There are five general types of Power of Attorney. A Durable POA remains in effect after the principal becomes sick or incapacitated. A General POA covers financial matters. A Health Care or Medical Power of Attorney covers … well, health care and medical decisions. The fourth type is a Limited POA, which is only valid for a specific period of time. The last type is a Springing POA, which takes effect when a certain event occurs such as illness or incapacity. It is important to note that there is no “one-size-fits-all” solution when it comes to Power of Attorney and each situation should be reviewed by an estate planning attorney before any decisions are made.

Prepare a POA Before it is Needed.

It is important to prepare a Power of Attorney before it is needed. This allows you to designate someone you trust to handle your financial and medical decisions if you are ever not able to do so yourself. Preparing a POA in advance can help smooth out any bumps in the transition process, but it’s also important to ensure that your document is legally binding and up-to-date with state laws.

If you sign a Durable General Power of Attorney, you can avoid probate court (in the form of a conservatorship) if you become incapacitated later. A Health Care Power of Attorney can help you avoid someone needing to become your guardian later if you get dementia or Alzheimers.

Make Sure You Choose the Right Person for Your Needs.

When selecting a POA you should carefully consider who will be most appropriate for your needs. It is important to choose someone that you trust, as they will make important decisions on your behalf if the need arises. Keep in mind not only your trustworthiness of that individual but also his or her availability, knowledge, and comfort level in taking on such a role. Additionally, many states require that the person be at least 18 years old and able to enter into contracts.

Securely Store Your Documents and Give Copies to Those Named in It.

Once you have signed your POA, it is important to properly store it in a secure place and give copies to those named in it. Additionally, make sure that your trusted person has the ability to access your documents should the time arise. Store them together with your will and other important documents, preferably using some type of safety deposit box or other secure system. Each entrusted person should keep a copy for safekeeping.

Let Us Help You Figure Out How Power of Attorney Works.

We have prepared hundreds of power of attorney documents. We also handle litigation cases involving disputes over power of attorneys. Either way, we can help you. Give us a call at 602-443-4888 today.


Founding attorney Paul Deloughery has been an attorney since 1998, became a Certified Family Wealth Advisor. He is also the founder of Sudden Wealth Protection Law.