Financial Power of Attorney Guide

A financial power of attorney (POA) is a legal document that authorizes someone you trust — your agent — to manage your financial affairs. It can be effective immediately (durable) or only when you become incapacitated (springing).

Durable vs. springing

• Durable — takes effect immediately and survives incapacity. The agent can act from day one.
• Springing — only activates when a doctor certifies you're incapacitated. More protective, but harder for banks to accept quickly.

Most people choose durable so there's no gap in authority.

What a financial POA covers

• Banking — accessing accounts, making deposits, paying bills.
• Real estate — buying, selling, or managing property. Usually requires notarization.
• Investments — managing brokerage accounts, retirement funds, and other investments.
• Taxes — filing tax returns and communicating with the IRS.
• Insurance — managing insurance claims and policies.
• Government benefits — Social Security, Medicare, Medicaid, and veterans' benefits.

Risks and protections

A financial POA is powerful — and dangerous if misused. Protect yourself:

• Choose your agent carefully — this person will have access to your bank accounts.
• Limit the scope — you can restrict the POA to specific accounts or transactions.
• Require accounting — your agent should keep records of all transactions.
• Name a monitor — a third party who can review your agent's actions.
• Revoke when no longer needed — if your agent is no longer appropriate, revoke the POA in writing.

Make it legal

• Sign the document.
• Notarize it — most states require notarization, especially for real-estate powers.
• Deliver copies to your bank, broker, and agent before you need them.
• Keep the original in a safe but accessible location.

A state-specific financial power of attorney drafted to your situation takes about ten minutes.