Power of attorney

The person granting authority is the principal; the person authorized to act is the agent, sometimes called an attorney-in-fact. You might use a financial power of attorney to let someone pay bills or deal with a bank when you cannot handle those tasks yourself. The agent receives authority to act, not ownership of your money. In the US, the document's terms and applicable state law determine how that authority starts, continues, and ends.

In a sentence

• "My power of attorney authorizes my daughter to pay $1,600 in monthly bills from my account."
• "I use a power of attorney to act for my parent, not to become a joint owner of the account."
• "The durable power of attorney is meant to keep working if I become incapacitated."

How it works

1. Identify the work being delegated. A power of attorney may authorize broad financial management or only particular tasks, such as paying bills from one account.
2. Read the start conditions. Authority may begin immediately or depend on a specified condition, subject to applicable law.
3. Check durability. A durable financial power of attorney allows authority to continue during incapacity, but does not expand the agent's powers.
4. Ask each institution how it recognizes an agent. A bank may review the document and verify the agent's identity before providing access.

An agent must stay within the granted authority and applicable legal duties. Authority to pay a principal's bills is not permission to treat the principal's money as the agent's own. Keep the document available and check its scope before taking on a task beyond the payments you already handle.

An example

Your parent's checking account holds $5,000. Assume your parent's valid, effective financial power of attorney authorizes you to pay the following bills, and the bank has completed its review of your authority.

You pay $1,200 + $200 + $200 = $1,600, leaving $3,400. The remaining $3,400 still belongs to your parent; paying the bills does not make the account your asset.

Why it matters

A financial power of attorney separates practical help from ownership. If you want someone to handle payments without adding that person as an account owner, that distinction changes the arrangement you need. Keeping receipts and a record of each payment also makes it possible to show how the principal's money was used.

Discussing authority before help is needed gives you time to ask institutions what they require, rather than discovering an access problem when a bill is due. A list of accounts and due dates helps someone organize the work, but it does not replace the legal authority needed to carry it out.

Power of attorney versus a joint account

A joint account has co-owners, while a power of attorney gives an agent authority to act for an owner without making the agent a co-owner. The distinction matters when your goal is help managing money rather than shared ownership. Adding someone as a joint owner is not merely another way to name an agent, so compare the authority you need with the ownership arrangement you intend.

Common questions

Does durable power of attorney mean unlimited authority? No. Durability concerns whether authority continues during incapacity. A durable document can still authorize only a narrow set of financial tasks, and the agent remains subject to the document's limits and applicable law.

Does a power of attorney start only when you become incapacitated? Not necessarily. Some financial powers of attorney take effect immediately; others depend on a specified condition permitted by applicable law. Read the document's effective-date provisions rather than assuming that the word durable tells you when authority begins.

Does the agent have to be a lawyer? No. Attorney-in-fact names the agent's role; it does not mean the agent must be an attorney licensed to practice law. Eligibility to serve and the duties involved still depend on applicable law.

Does a financial power of attorney continue after death? No. The agent's authority under a financial power of attorney ends at the principal's death rather than becoming authority to administer an estate. Durable concerns incapacity, not death.

Go deeper

• How to help a parent manage their money connects an account-and-bill list with practical support and arranging legal authority before it is urgent.
• How to set up a joint account for shared bills explains what a shared bills account holds and how to fund it when shared ownership is the arrangement you want.