Powers of attorney and legal protection
Durable Power of Attorney: What It Lets Your Agent Do
What a durable power of attorney lets your agent do: pay bills, use accounts, file taxes, and hire help, plus the firm limits on that power and the duties the law puts on an agent.
A power of attorney is a paper that lets one person act for another. The person who signs it is called the principal. The person who gets the power is called the agent. This guide shows what a durable power of attorney lets an agent do, what it does not allow, and the duties that come with the job.
This guide is part of our Aging at Home hub. Its sister guides cover choosing a trustworthy financial agent, guardianship, conservatorship, and alternatives to explore, and finding elder law assistance and affordable legal services. A related guide is choosing a health care agent and discussing your wishes.
Key takeaways
- A durable power of attorney stays in force if you later lose the ability to decide for yourself.
- Your agent can only do what the paper says. Powers not listed are not granted.
- An agent must act in your interest, keep your money apart from theirs, and keep records.
- The power ends when you die. It is not a will and cannot replace one.
- State law sets the rules, so the form and signing steps differ by state.
The three forms, in plain words
A regular power of attorney ends if the principal loses the ability to make choices. That makes it a poor fit for aging planning. A durable power of attorney has words that keep it in force even if the principal later cannot decide. That one word, durable, is the point of the paper. A springing power of attorney does not start at once. It starts when a stated event takes place, most often when a doctor writes that the principal can no longer manage their affairs. A springing form sounds safe, but it can cause delays. The agent may have to prove the event took place before a bank will act.
Most lawyers who work with older adults suggest a durable form that starts at once, given to a person you trust fully. The right choice depends on your family and your state, so ask before you sign.
What your agent can do
The paper lists the powers. A broad form can let an agent do most of the tasks below. A narrow form may grant just one or two.
One limit comes up a lot. Some agencies use their own forms and may not take a power of attorney. Social Security, for one, names its own helper, called a representative payee. If benefits are a key concern, ask the agency what it needs while you can still sign forms.
Health care choices are a split issue. A financial power of attorney does not grant health care power unless the paper says so in clear terms. Most states use a separate health care form for that role. Our guide on choosing a health care agent covers that choice in full.
- Pay bills, write checks, and use bank accounts.
- File tax returns and deal with the tax office.
- Apply for benefits and deal with benefit offices on your behalf.
- Buy, sell, or manage real estate, if the paper grants that power.
- Manage insurance policies and file claims.
- Hire help, such as home care, and pay for it from your funds.
- Run a small business or handle rental property, if the paper says so.
What your agent cannot do
A power of attorney has firm limits, no matter what the agent wants.
- An agent cannot make or change your will.
- An agent cannot marry, divorce, or vote in your place.
- An agent cannot act after your death. At death, the power ends, and the will or the court takes over.
- An agent cannot hand the job to someone else unless the paper allows it.
- An agent cannot give your money to themselves, or mix it with theirs, unless the paper grants that gift power in clear terms.
- An agent cannot override you. While you can still decide, your word rules, and you can take the power back at any time.
The duties that come with the job
The Consumer Financial Protection Bureau, in its Managing Someone Else's Money guide for agents under a power of attorney, lays out four duties for the job. One: act only in the principal's best interest. Two: manage the principal's money and property carefully. Three: keep the principal's money and property separate from the agent's own. Four: keep good records. Staying clear of conflicts of interest, where the agent's own gain could come before the principal's needs, sits inside the first duty: the agent acts only for the principal.
These duties are law in most states, not just good manners. An agent who breaks them can be made to repay funds and can face court action. If you are named as an agent, read the bureau's free guide for agents before you act. It is written in plain words and walks through the job step by step.
Signing rules and state law
Each state writes its own rules for these papers. Many states have a standard form in state law. Most states ask for your signature in front of a notary, witnesses, or both. A home-made form can fail if it skips a state step, so check your state's rules or have a lawyer review the paper.
Banks can be strict. Some banks ask to review the paper before they honor it, and some push for their own form. It helps to ask your bank what it needs while you are well and can sign new forms with ease. Keep the signed paper in a safe place your agent can reach. A paper locked in a bank vault that your agent cannot open does no good.
Who covers what
A power of attorney is a legal paper, not a health care service, so health coverage does not pay to make one or to use one.
- Original Medicare: does not pay for legal papers, and does not pay an agent for acting.
- Medicaid: does not pay to create a power of attorney.
- Private pay: the principal pays any cost of making the paper, such as a lawyer fee if a lawyer is used or a notary fee if the state asks for one. Ask the cost before you sign.
- The agent's side: when an agent pays the principal's bills, the agent uses the principal's own funds for the principal's costs, as the paper allows. The agent does not use their own money for the principal, and does not use the principal's money for themselves.
- Benefit agencies: Social Security does not act on a power of attorney for benefit checks. It names its own representative payee instead, so that cost and that role sit outside the paper.
Sample Situation
Rosa, age 78, signs a durable power of attorney that names her daughter, Ana, as agent. Two years later Rosa has a stroke and cannot speak for a month. Ana uses the paper to pay Rosa's rent and power bills, file her tax return, and hire an aide for her return home. Ana keeps each receipt in a folder and pays nothing of her own from Rosa's account. When Rosa recovers and can decide again, she takes charge of her accounts once more, and Ana's folder shows each act she took.
Your next step
A power of attorney is one part of paying for care in later life. When you are ready to see how care costs and coverage fit together, our Paying for Care section walks through who pays for what, in plain terms.
Sources
Next step on Care and Living Guide
Paying for care — See who pays for care — Medicare, Medicaid, and private pay.