A financial Power of Attorney (POA) is a legal document that gives another person, called your 'agent', the legal authority to act on your behalf.

You, as the “Principal”, give an agent the power to make decisions on your0 behalf. These decisions are related to your personal, legal, financial and health issues. Your agent can make important decisions regarding all these matters without your specific permission.

A power of attorney is a tool that allows an agent to act on your behalf if you become incapacitated. With a POA, you can determine who you want to act on your behalf in certain situations. In some circumstances, a power of attorney might be used as a cheaper alternative to guardianship.

Once you sign a POA, it will take effect immediately and not when you are incapacitated. When you, as Principal, grant a power of attorney to your agent, you are giving your agent authority of indefinite or limited duration.

A Limited Power of Attorney (click here) allows an agent to make decisions regarding a specific event or during a precise period of time. This type of power of attorney restricts the scope of the agent's potential legal activities. The Principal lists all the powers vested in the agent, such as the power to sign a lease, to sell a car, to access a US Post Office mailbox, or to handle a tax matter.

An Indefinite Power of Attorney allows the agent to continue to act on behalf of the Principal, even if the Principal becomes incapacitated. Retirement care planners, for example, can grant an agent an indefinite power of attorney, giving him the power to create or modify a trust, make a charitable gift, or modify a retirement plan.

A General Power of Attorney allows the agent to make a wide range of decisions on behalf of the Principal, but the POA can end when the Principal becomes incapacitated.

To grant an Indefinite Power of Attorney, you:

- Must be a legal adult (at least 18 years old)
- Fully understand the document
- Have two people who witness your signature
- Notarize the document.

A Power of Attorney can be changed (modified) or revoked (terminated) by yourself at any time.
The “Principal” of a POA document is the one who both creates and owns the document.

If you are creating a Power of Attorney, you are the Principal or the person giving someone else power over their affairs. The “Attorney” is the person or entity that is being given the authority to manage your affairs.

A POA automatically dismisses when any of the following happens:

- The Principal dies;
- The Principal revokes (terminates) the Power of Attorney;
- A court determines that the Principal is either partially or totally incapacitated, or somehow unable to make sound decisions, and the Principal has not specifically stated that the Power of Attorney would remain after possible incapacitation;
- The purpose established in the Power of Attorney is completed;
- The indicated date range (also called “term” of the Power of Attorney has passed)
A Power of Attorney is a highly powerful document. Think before you sign it, considering the following questions:
- Why do you want a POA?
- Why do you need a POA?
- What do you want to allow your agent to be able to do on your behalf?
- Is there any possible or even better alternative available?
- In bad times or during a financial crisis, may this person use this document to hurt you financially?
- Should you give your agent a limited power of attorney or a broad power of attorney?
Before you draft your Power of Attorney, ask the person you chose if he will follow your wishes and agree to be appointed as your agent. Sometimes your loved ones will refuse for a while.

If a health care surrogate has been designated in writing, he has the authority to make medical and some mental health treatment decisions for you. Before signing a Power of Attorney, consult with an attorney.

Also, be sure to consider that if you have joint assets with your agent, as a co-owner, he or she can act without your consent. This will create you financial difficulties if your agent mismanages his powers.