Understanding the Role of Power of Attorney

An overview of how a Power of Attorney functions in estate and healthcare planning to help families prepare for future decision-making.

1. What is a Power of Attorney?. A Power of Attorney is a formal agreement where the 'principal' grants authority to an 'agent' or 'attorney-in-fact' to make specific decisions. It does not mean the principal loses their own rights or ability to make decisions while they are capable; rather, it ensures that a trusted person is already authorized to step in if the principal becomes unable to manage their affairs due to illness or absence. There are generally two primary types: a financial POA, which covers banking, property, and investments, and a healthcare POA (sometimes called a healthcare proxy), which focuses on medical decision-making. Each document is legally distinct and serves a specific purpose in protecting the principal's interests.
2. The Responsibilities of the Agent. The person acting as an agent has a fiduciary duty, which means they are legally obligated to act in the best interest of the principal at all times. They must manage assets or medical choices exactly as the principal would have wanted, prioritizing the principal's values and documented wishes over their own. Families often find it helpful to discuss these roles clearly before a crisis occurs. This ensures the agent understands the principal's preferences and that all parties are comfortable with the scope of authority granted in the legal documents.