Power of Attorney Explained: Simplifying Legal and Financial Decisions Together

Marty Stevens-Heebner
Feb 10
4 min read

Updated: Apr 1

As a caregiver, you take on a tremendous amount of responsibility to ensure the well-being of your loved one. From coordinating medical appointments to managing daily needs, you are often the glue holding everything together. But what happens when legal or financial decisions need to be made? This is where understanding a power of attorney (POA) becomes essential.

In this guide, we’ll break down why a power of attorney is so important, the different types of powers that a POA can provide, and how you can help your loved one set one up to protect their needs and interests.

What is a Power of Attorney?

A power of attorney is a legal document that grants someone (the “agent” or “attorney-in-fact”) the authority to act on behalf of another person (the “principal”). This authority can cover financial, medical, and legal decisions depending on the type of POA established.

A POA is especially vital because it ensures that someone trusted and dependable is legally able to make decisions if your loved one becomes incapacitated or unable to act on their own behalf. Without it, families may face delays or legal challenges when trying to step in.

Why Is Having a Power of Attorney Important for Caregivers?

The power of attorney is a vital legal tool because it provides the authority to make timely decisions in emergencies, such as accessing financial or medical records without delay. It also ensures that your loved one’s wishes are respected, reducing their stress and anxiety. By designating a single decision-maker, a POA helps prevent family disputes and confusion. Most importantly, establishing a POA while your loved one is still competent allows them to have a say in who manages their affairs, ensuring their preferences are honored. (For additional preparation, see our blog post "The Essential Guide to Home Inventories" to learn why knowing where all necessary documents like this need to be accessible.)

Types of POAs

Each state's regulations can vary slightly in terms of the names of the different types of POAs.

A general power of attorney is just that, it grants the agent the right to help make daily decisions. It could be financial, medical, or other legal matters. It will become invalid if the person who granted it becomes incapacitated. A durable power of attorney remains in effect even if the individual is no longer able to make decisions or becomes incapacitated in some way. This could be advancing dementia or an injury that causes a coma.

A medical or healthcare power of attorney allows the agent to make medical decisions for some if they are unable to do so themselves. They can decide on surgeries, medications, and end-of-life care. A financial power of attorney gives the agent authority over the finances such as bill paying, filing taxes, and managing bank accounts.

How to Set Up a Power of Attorney

Creating a POA doesn’t have to be overwhelming. In fact, it can feel empowering when you are taking such a big step in ensuring you, your family, and your parents are going to be taken care of in the way they would like to be. Here’s a step-by-step guide to get started:

Discuss with Your Loved One: Ensure they understand what POA entails and why it’s important. Let them choose a trusted agent (or agents).
Determine the Type of POA Needed: Consider their specific needs, such as financial, medical, or both.
Consult an Attorney: While it’s possible to find POA forms online, working with an attorney ensures that the document complies with state laws and covers all necessary details. We have several recommended Estate Attorneys on the AgeWise Alliance website. Create a free profile, search, and know you can trust our professionals.
Draft the POA Document: The document should clearly outline the agent’s powers, any limitations, and when the POA takes effect.
Sign and Notarize: Most states require the POA to be signed by the principal in the presence of a notary public. Some states may also require witnesses. In California, you must print a hard copy and sign it in the presence of a notary public or two competent witnesses.
Distribute Copies: Provide copies of the POA to relevant parties, such as financial institutions, healthcare providers, and family members.
Review Regularly: Circumstances can change, so revisit the POA document periodically to ensure it still meets your loved one’s needs.

Common Questions About Power of Attorney

Can more than one person be named as an agent? Yes, the principal can name co-agents, though this can sometimes lead to conflicts. Alternatively, a successor agent can be named in case the primary agent cannot serve.
When does a POA end? POA ends when the principal revokes it, passes away, or when the specified time or purpose of the POA has been fulfilled.
Can a POA be contested? Yes, if family members believe the agent is not acting in the principal’s best interest, they can challenge the POA in court.
Does a POA give control over everything? No, the powers granted depend on what’s outlined in the document. For example, a medical POA only covers healthcare decisions while a financial POA focuses on managing a person’s financial assets.

Feeling Overwhelmed?

Navigating the legalities of power of attorney can feel stressful, but AgeWise Alliance is here to help. Our platform connects you with trusted legal professionals who can guide you through the process of setting up POA. Whether you’re a caregiver looking for support or a family member planning ahead, we provide resources to make these decisions easier.

With AgeWise Alliance, you can:

Find experienced elder law attorneys in your area.
Glossary of Professions of over 80 different later life services so people can understand who does what - and realize just how much help is out there.
Learn more about caregiving, estate planning, and other vital topics.

Sign up for a free account on AgeWise Alliance to access resources, connect with professionals, and take the stress out of caregiving. Let us help you navigate this journey with confidence and peace of mind.

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About AgeWise Alliance

AgeWise Alliance is an online platform dedicated to helping older adults and their families navigate the challenges of later life. From finding trusted professionals in caregiving, legal, and financial planning to offering practical resources and expert advice, we make life’s transitions easier. Visit agewisealliance.com or follow us on Instagram at @agewisealliance to learn more about how we can support you and your loved ones.