A financial power of attorney allows a person, called the principal, to delegate to another person, called the agent (often a family member or trusted friend), the power to make decisions regarding the principal’s finances, including buying and selling assets; opening, closing, and managing bank, brokerage, and other accounts; and handling other financial matters, including hiring an attorney to represent you and filing and paying your taxes. The agent will speak for the principal and make decisions according to the principal’s wishes. In addition, if the power of attorney is “durable,” its effectiveness continues after the principal becomes incapacitated.

Key Points

What are the Advantages?

A financial power of attorney is a way for you to decide in advance who will handle your financial affairs if you are not able to act on your own behalf in the future, regardless of the reason. It gives you (rather than the courts) more control over your life.

A financial power of attorney is a flexible document. It helps assure that your agent’s authority will be honored by others at the time any delegated power is exercised. You can give either limited or broad financial decision-making authority to your agent, depending on your needs. For example, you may want your agent to have broad powers to authorize real estate and stock transactions; to handle banking, tax, or other types of business matters; to represent you in court; or to address other types of legal claims. Alternatively, you may want to limit your agent’s authority to handling one specific transaction, such as purchasing a specific piece of real estate. However, if you want your power of attorney to survive your incapacity, it must be “durable.”

Creating a Financial Power of Attorney

Many states have simple forms to fill out to grant someone a power of attorney and make them your financial agent. Many states do not require that you use these forms; however, financial institutions within the state are probably familiar with the state forms. Therefore, it is usually a good idea to use the state form whenever possible.

A financial power of attorney can either take effect immediately or in the event you become incapacitated (called a springing power of attorney). With a power of attorney that takes effect immediately, your named agent will have the immediate right to control your financial assets, whether or not you are deemed incapacitated. Some fear that this will give the named agent the unfettered ability to access the principal’s assets. However, if there is this lack of trust, this individual probably should not be named agent. On the other hand, a springing durable power of attorney becomes effective under the terms of the document. This usually means that a doctor or a court must make the determination of incapacity. That is expensive and time consuming, and one of the purposes of creating a financial power of attorney is to reduce or avoid unnecessary expense.

What Kinds of Powers Should You Give Your Agent?

In addition to managing your day-to-day financial affairs, your agent can take steps to implement your estate plan. Although an agent cannot revise your will on your behalf, some jurisdictions permit an agent to create or amend trusts for you during your lifetime or to transfer your assets to trusts you created. Even without amending your will or creating trusts, an agent can affect the outcome of how your assets are distributed by changing the ownership (title) to assets. It is prudent to include in the power of attorney a clear statement of whether you wish your agent to have these powers.

Gifts are an important tool for many estate plans, and your agent can make gifts on your behalf, subject to guidelines that you set forth in your power of attorney. While some states permit agents to make gifts as a matter of statute, others require explicit authorization in the power of attorney. If you have older documents you should review them with your attorney. Because of the high estate tax exemption ($13.99 million in 2025) many people who had given agents the right to make gifts may no longer wish to include this power. Others, however, in order to empower their agent to minimize state estate tax might continue or add such a power. Finally, there may be reasons not to limit the gifts your agent may make to annual exclusion gifts to facilitate Medicaid planning or to minimize or avoid state estate tax beyond what annual exclusion gifts alone might permit.

What if You Move?

Generally, a power of attorney that is valid when you sign it will remain valid even if you change your state of residence. Although it should not be necessary to sign a new power of attorney merely because you have moved to a new state, it is a good idea to take the opportunity to update your power of attorney. The update ideally should be part of a review and update of your overall estate plan to be sure that nuances of the new state law (and any other changes in circumstances that have occurred since your existing documents were signed) are addressed.

When Does a Financial Power of Attorney End?

As the principal, you can specify the time at which the financial power of attorney will begin and terminate. However, unless you state an earlier termination date, the financial power of attorney document will continue until your death.

Other Things to Consider

Before executing your financial power of attorney, you should talk to your soon-to-be agent to determine whether they are willing to serve as your agent and review how you would like your financial affairs to be handled in the event that your agent must exercise their authority.

It is advisable to designate one or more successor agents in case the primary agent is unavailable, unable, or unwilling to act. Additionally, after the financial power of attorney is properly executed, your agent and successor agents should have copies of your financial power of attorney.

Some clients with multiple children want to name all of their children as their agents to act together so as not to offend anyone. But this may create more problems than it solves. First, how many is too many? Any time there is more than one agent, the need to make decisions together can become cumbersome. Additionally, should all agents be required to act together, or should they be able to act independently? The necessity of two or more signatures on every check and document will make it difficult for the agents to get anything done, but it can provide a strong check and balance. If joint agents are named, care should be taken to make sure the goals of the power of attorney are not thwarted because the agent’s job becomes more difficult.

The Bottom Line

A financial power of attorney is an important tool for everyone because even a young and healthy person could experience a sudden accident and not be able to handle their own financial affairs. For your agent to handle your financial matters if you are not able to, the financial power of attorney must be durable.