Explanation of Power of Attorney

By Lisa Magloff

A power of attorney is a legal document that gives one person the power to make certain decisions for another person. The person who signs the document is called the principal. The person authorized to make decisions on behalf of the principal is called the agent or the attorney-in-fact. The agent does not need to be an lawyer. There are several different types of power of attorney, and each gives the agent authority to make different types of decisions.


People make out a power of attorney for different reasons. Some people use a power of attorney to allow an agent to handle their financial affairs or to run a business on their behalf when they are busy or away for a period of time. Other power of attorney documents only take effect if the principal becomes mentally or physically incapacitated. In this case, the agent might make medical decisions for the principal, look after their financial affairs or both.

General and Limited Powers

A general power of attorney allows the agent to conduct a wide variety of transactions for the principal. This type of power of attorney is used to allow the agent to run the principal's financial and business affairs. The exact powers given to the agent are listed in the power of attorney document. A limited power of attorney gives the agent the power to preform only a specific act, such as completing a real estate purchase or making a particular investment. General and limited powers of attorney can both be written so that they come into effect immediately or only come into effect if a particular event occurs. For example, the power may come into effect only on a particular date or only if the principal becomes incapacitated.

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Durable Power

Most powers of attorney end automatically if the principal become incapacitated. If a power of attorney contains a clause stating the power of attorney does not end when the principal becomes incapacitated, then it is called a durable power of attorney. This durable power of attorney can be written to allow the agent to make medical decisions, financial decisions or both. This type of power of attorney contains a list of the powers given to the agent and when each power should take effect. For example, the powers may take effect immediately or only if the principal becomes incapacitated.


All powers of attorney automatically end on the death of the principal. The agent cannot act as the principal's executor unless there is a separate legal document naming her as the executor. In addition, the principal can revoke the power of attorney at any time and for any reason. A court can also invalidate a power of attorney, particularly if the principal was not of sound mind when they signed the document or if the agent has committed fraud. In many states, including California and Texas, if the principal's spouse is acting as the agent and the two get a divorce, the power of attorney is automatically revoked.

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Example of a Power of Attorney Form


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Does Power of Attorney Become an Executor of the Will Automatically?

A power of attorney grants an individual, known as an agent or "attorney-in-fact," the power to act on behalf of the person granting the power, known as the "principal." This document may give an agent broad authority to manage the principal's finances or limited authority during the principal's lifetime, such as the power to pay specific bills. Executors, on the other hand, are named by a will maker, or "testator," in a last will and testament and their authority only comes into existence upon the death of the testator.

Can There Be More Than One Power of Attorney?

When you want to give someone authority to make decisions in your place, a power of attorney is one way to proceed. This legal document gives one person, called the agent, the power to act for another person, called the principal. In the document, you describe the scope of authority you are granting your agent. Powers of attorney are intended to benefit the principal making them, so generally you are free to create as many as suit your needs.

Can You Have a Dual Power of Attorney With Two Acting Agents?

A power of attorney for finances is a document that gives someone – your agent – the right to act on your behalf, but sometimes it’s helpful to have two agents acting for you instead of one. State laws governing powers of attorney vary. Multiple agents who can act together are generally permitted, but some states, like Florida, allow co-agents to act independently of each other unless the power of attorney document specifies otherwise.

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