Executive summary
- A power of attorney designation is a tool that allows someone to make legal, medical, or financial decisions on your behalf.
- A power of attorney may be necessary if someone becomes incapacitated, is traveling abroad, or is aging and of questionable mental capacity.
- A power of attorney designation is not a replacement for proper estate planning through a will or trust.
- A lack of power of attorney can open up the opportunity for potential wrongdoing, so an estate and probate administration attorney may be necessary for navigating disputes.
Introduction
A power of attorney (POA) document gives you the ability to appoint a person or an organization to exercise the right to manage your legal, medical, financial, or business affairs if you become incapacitated and can no longer do so for yourself. You can designate anyone you trust to act as a power of attorney.
In many cases, people name an actual lawyer or a law firm to handle their affairs, but this is not a requirement. Many people also choose to designate a close friend or family member they know they can trust and who understands their wishes. A power of attorney agreement lasts until you pass away or you change or cancel the terms of the agreement. However, the actual date upon which the agreement would take effect may vary depending on the terms of the document.
There are a variety of circumstances where a power of attorney agreement may be helpful, from an unforeseen medical emergency to estate planning. Whether you are considering designating a power of attorney or are unsure if it’s worth it, it’s important to understand the benefits of designating a power of attorney. This guide outlines how a power of attorney works and what you can gain from designating one.
What does a power of attorney do?
A power of attorney provides an individual authority to act on behalf of another to make decisions for them and manage important legal, medical, or financial affairs on their behalf. Generally, only the individual can make legal decisions about themselves, but a power of attorney grants this ability to others, empowering them to act as your agent or attorney-in-fact.
A power of attorney can be either permanent or set for a designated timeline. This power may be focused on allowing a person to make decisions regarding specific affairs, or it can be more general in its scope.
Examples of the abilities that power of attorney designation may grant include:
- The ability to sign a contract or manage other business interests on another’s behalf
- The ability to transfer or gift estate assets
- The ability to buy, sell, or manage real estate on another’s behalf
- The ability to pay someone else’s bills and debts
- The ability to file someone else’s taxes
- The ability to handle investments on someone else’s behalf
- The ability to make medical decisions
The powers granted to a power of attorney are contingent based on the agreement drafted and the powers specified. The abilities granted by a power of attorney designation make this a valuable tool in estate planning. Understanding the potential of a power of attorney designation can allow you to have someone you trust carry out your estate plans.
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Types of power of attorney
It’s important to note that there are many different types of power of attorney relationships that may apply depending on your needs. The following are the most common types.
General Power of Attorney
This kind of arrangement gives sweeping powers to the agent you select, allowing them to handle all of your financial affairs and business transactions, pay your bills, settle claims, and retain others to help manage your affairs. It can also cover health care options if you become unable to make decisions for yourself.
Health Care Power of Attorney
As the name implies, this gives your agent the authority to make only medical decisions on your behalf if you become physically or mentally unable to do so on your own. This is not the same as an advanced health care directive, but when combined with a living will or trust, it can form the basis for crucial medical decisions.
Financial Power of Attorney
This limits your agent to making financial decisions on your behalf, including managing your investments, paying bills, protecting your business interests and other related matters.
Durable Power of Attorney
If you have a power of attorney agreement already in effect to handle your affairs, this version allows a POA to remain in effect if you become unable to for any physical or mental reason. For a durable Power of Attorney to go into effect, it’s best to specify that you will want a doctor to certify that you are no longer competent to manage your affairs.
Why do you need a power of attorney?
The risks of not having a power of attorney may result in ambiguity surrounding important decisions in the event that you are not able to. Lacking a power of attorney may also stall important decisions, such as real estate transactions, medical decisions, and other financial decisions.
If you own a business, not having a power of attorney may result in delayed or disrupted business transactions. Choosing someone you know will act in your best interest will ensure that you are able to handle important affairs as necessary and avoid issues or delays.
A designated power of attorney can also allow you to avoid having to enter a conservatorship or guardianship, which requires a lengthy court process. Unlike a power of attorney, the affected party has no say in the guardian or conservator being appointed to manage their affairs, which could result in decisions being made against their interests.
Reasons for power of attorney
Having someone who can make decisions for you is important in a variety of circumstances, from an unexpected medical event to a need for support in managing business interests. A power of attorney can be valuable in the following instances.
Managing health issues or medical emergencies
If you suddenly become incapacitated or face a medical emergency that prevents you from making important decisions, a power of attorney is a valuable resource. An authorized POA will be able to support you by making medical decisions like where you should receive care, allowing or refusing medical interventions like surgeries, determining end-of-life care, and more.
Traveling or living abroad
If you are planning to move abroad or take a lengthy trip, a power of attorney is helpful since you will not be present to make important decisions. A POA will be available to accomplish all the following while you are away:
- Managing emergency financial needs, like paying bills or unforeseen expenses
- Obtaining and accessing important documents like tax returns, bank records, or contracts
- Managing business interests like employee payroll or contracts
- Handling real estate or property transactions in your absence
Planning for aging and future incapacity
A power of attorney is also a helpful resource for individuals who may be aging and experiencing a decline in mental capacity. In these cases, an individual may be at risk of either not being able to make sound decisions or making decisions that may not align with their intentions.
This is especially important because, as people age, they may be more susceptible to undue influence from another party. Designating a trusted agent makes it more difficult for someone to take advantage of you in a case of financial elder abuse.
A POA may also be a good resource for estate planning. Although an agent with power of attorney usually cannot make material changes to a will or other estate planning documents, they can make gifts and financial donations on someone’s behalf if they are incapacitated.
Handling business interests and properties
A power of attorney can be helpful if you manage a complex business or a large number of properties or assets in multiple locations where you may not be present for their sale. It can be inconvenient to have to travel to transfer a title or sign over ownership for every transaction if you are managing business matters elsewhere.
Designating an agent with a power of attorney allows you to avoid having to travel and can instead allow someone else to manage these transactions on your behalf.
Purpose of power of attorney
Designating a power of attorney can serve several purposes, but the key benefit is the ability to ensure your wishes are honored. If you are placed in a position where you are unable to make decisions on your own, you know that your designated agent understands your wishes and how to best carry them out.
In turn, a power of attorney also provides peace of mind, especially in cases of estate planning. Having a power of attorney in place allows for the security of knowing that someone you can trust is responsible for managing important decisions.
This peace of mind is also valuable if an individual may be susceptible to undue influence. A power of attorney designation ensures that a person you can trust and rely on is in charge of your affairs.
Who needs a power of attorney?
Anyone may need to establish a power of attorney—there is no specific restriction based on age group or demographic. In many cases, having a power of attorney is a good step for being proactive in the event of the unforeseen. That said, some people may benefit from having a power of attorney more than others.
If any of the following circumstances apply to you, you should consider establishing a power of attorney:
- You are planning to travel internationally for an extended period of time
- You are susceptible to a medical condition that could leave you incapacitated
- You are aging and at risk of mental incapacity
- You own assets or property in multiple states or travel frequently
- You are a business owner who needs support managing affairs
Considerations when choosing an agent
When designating a power of attorney, you can choose any person you’d like to serve as your agent or attorney in fact, as long as they have the mental capacity to serve. It’s important to choose an agent who is reliable and trustworthy. Many people choose to name a close family member, like a spouse or a child.
You may choose to grant one person a power of attorney or multiple. You may also choose to divide the different powers amongst different people. If you decide to name multiple co-agents, you should specify whether each can act independently or if a majority opinion is necessary to make decisions. It’s also often a good idea to name a successor agent to ensure that someone is able to make decisions on your behalf if the original individual is unable or unwilling.
Regardless of who you consider choosing, you should have an open conversation with that individual to ensure they understand your wishes and expectations in situations where they may need to make decisions.
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How to create a power of attorney document
To create a power of attorney document and cement this designation in the law, you must complete a form that identifies yourself as the principal and the representative as your agent. You may be able to either create your own document, find a template online, or complete a form offered by your state. Keep in mind that this process may look different depending on the state you are in.


California
In California, to designate a power of attorney, you must be at least 18 years of age, have the mental capacity to understand the potential impacts of your actions, and have the power of attorney signed in front of a notary public or in front of two witnesses. A POA must be notarized if your POA offers authority to manage real estate.
You can find a form online, or California allows you to create your own form. Your agent can be anyone you trust to act in your best interests as long as they are at least 18 years old and of sound mind. Once your form is signed and witnessed, you can give a copy to your agent and interested parties, like your bank or doctor.
California offers the following types of POA:
- Durable power of attorney, which remains in effect after an individual becomes incapacitated
- General or financial power of attorney
- Medical power of attorney
- Limited power of attorney, which only acts for a limited period of time


Texas
In Texas, a POA document must be signed before a notary public by someone who is at least 18 years old and of sound mind. If you are providing your agent with the ability to conduct real estate transactions, then you must file your power of attorney document with the clerk of any county where your property is located.
Similar to California, you can choose any adult of sound mental capacity you trust to make decisions for you to act as your agent. A form for designating a power of attorney is available for use in the Texas Estates Code, or you can use a template found online.
Texas offers the following types of POA:
- General power of attorney
- Limited power of attorney
- Durable power of attorney
- Springing power of attorney, which gives an agent authority if the principal becomes incapacitated
- Medical power of attorney
Common misconceptions about power of attorney
Although a power of attorney designation has many benefits and can be a valuable source of protection, it does have some limitations. Ultimately, a power of attorney does not have sweeping powers over a person’s interests like a guardianship or conservatorship would.
You should be aware of the following misconceptions so that you can avoid being caught off guard:
- A power of attorney designation is not only for the elderly, and can be helpful for adults of any age.
- A power of attorney is not a replacement for estate planning, and you should still create a will or living trust that identifies a trusted individual to act as the executor or trustee of your estate.
- If you designate a power of attorney for your estate planning, they do not have full power to alter a will or trust instrument.
- A power of attorney is separate from a guardianship or conservatorship, which can only be instituted after a person becomes incapacitated.
- A power of attorney designation is typically not a blanket designation, and may only apply to the state it is signed in. If you own property in multiple states, you should be aware of their laws regarding power of attorney.
Case scenario: Importance of having a POA
This hypothetical case scenario demonstrates the importance of designating a power of attorney for important decisions and highlights how not having a POA may play out in a real-world scenario.
Alan is a single father of two children, Darren and Kayla. However, he never designated a power of attorney with authority to manage his affairs. Unfortunately, Alan suffered a stroke that left him hospitalized, incapacitated, and unable to manage his own affairs.
Following his stroke, Alan’s children were unable to access accounts in his name to pay for crucial bills like his mortgage and utilities. Alan also sent yearly financial gifts to accounts for his grandchildren to minimize future estate taxes.
In order to receive access to these accounts, his two children had to seek to establish a legal guardianship through the court. However, Darren and Kayla both disagreed regarding who should be Alan’s official guardian, leading to a lengthy dispute. Eventually, Kayla was appointed by the court and could continue paying the necessary expenses, but not before a long, drawn-out process.
The process of establishing a guardianship took considerable time and expense to pay for court fees and filing. Because Alan did not have a power of attorney designation in place, it led to a much longer and more expensive process and eventual disputes surrounding the guardianship that could have been avoided.
Keep in mind, every case is unique, so if you are experiencing concerns regarding a guardianship or conservatorship or other elements of estate planning, you should consult an attorney about your unique case.
Need help with power of attorney matters?
RMO offers comprehensive legal services to assist you.
Serving clients across California and Texas
Updating or revoking a power of attorney
You may find it necessary to update or revoke your power of attorney in instances when you are no longer incapacitated, if you return from international travel, or if you change your mind regarding who you want to appoint as your attorney-in-fact. You may also choose to revoke a power of attorney if an agent abuses their power, in a manner such as misappropriating assets or wrongfully executing an estate plan.
Typically, there is no way to change or edit a power of attorney. If you need to update your power of attorney, you should create a completely new document and revoke the original document.
To revoke the original document, you should create a letter specifying your revocation and distribute it to any interested parties—this includes the agent themselves, as well as any third parties that may have the document on file.
Navigate estate disputes with RMO
A power of attorney can be a helpful tool in estate planning, providing someone you trust with the ability to make important decisions. However, if there are questions regarding how a power of attorney designation was implemented or if it leads to questionable decisions made on someone’s behalf, it could interfere with estate management or asset distribution.
If a power of attorney designation has affected your estate plans or the plans of someone close to you, our probate and estate administration attorneys at RMO can help you navigate the challenges of the legal process. From providing support in will contests to managing a conservatorship or guardianship, we’ll help you build a winning strategy to secure access to your rightful inheritance and work tirelessly to promote the wishes of your loved one.
Schedule a consultation with our team at RMO Lawyers to discuss your legal options.