What Is Power of Attorney and Why Every Adult Should Have One

A power of attorney lets a trusted person make decisions on your behalf if you become unable to — for finances, medical decisions, or both. Here's what you need to know.

In this guide (5 steps):

1.Understand the two main types
2.Choose your agent carefully
3.Set up a Durable POA
4.How to create a POA
5.Store and share the document

Understand the two main types

~20s

Financial Power of Attorney: Gives your agent authority to handle financial matters — bank accounts, bills, real estate, investments — if you're incapacitated. Healthcare Power of Attorney (also called Healthcare Proxy or Medical POA): Gives your agent authority to make medical decisions if you can't speak for yourself — treatment choices, end-of-life care, surgery decisions. Most people should have both.

Choose your agent carefully

~18s

Your agent must be someone you trust completely. They'll have significant legal authority. Most people choose a spouse, adult child, sibling, or trusted close friend. Consider: who lives nearby and can act quickly, who handles stress well, who understands your wishes and values. Name a backup agent in case your first choice can't serve.

Set up a Durable POA

~24s

A "Durable" power of attorney remains in effect even if you become incapacitated — that's what makes it essential. A non-durable POA terminates if you become incapacitated, making it nearly useless for the purpose most people need it for. Make sure any POA you sign is explicitly "Durable."

Quick Tip

Quick Tip: Every state has slightly different POA requirements. Using a state-specific form is important. Your state bar association website usually has free or low-cost forms.

How to create a POA

~21s

Options from least to most expensive: 1. State-specific forms: Many states publish free POA forms. AARP also provides guidance at aarp.org/legal-counsel. 2. Legal document services: Sites like LegalZoom or Trust & Will create customized POAs for $50–$150. 3. Estate planning attorney: $200–$500, recommended if your situation is complex. An attorney can also prepare a will, healthcare directive, and other documents at the same time.

Store and share the document

~29s

Sign the POA in front of a notary public (required in most states) and witnesses. Keep the original in a safe place (fireproof box, bank safe deposit box). Give certified copies to: your agent, your bank, your doctor's office, and any institution that may need to act on it. Let your agent know where the original is.

Warning

A POA only takes effect under the conditions you specify. Review yours with an attorney if you're unsure about what triggers it. Outdated documents may not be accepted — review every 3–5 years.

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Power of attorney (POA) is a legal document that gives someone you trust — called your agent or attorney-in-fact — the authority to act on your behalf. This matters most if you become unable to make decisions yourself due to illness, injury, or cognitive decline.

Without a power of attorney, even your closest family members may not have the legal authority to pay your bills, access your bank account, or make decisions about your healthcare if something happens to you. They'd need to go through a court process called guardianship — which is expensive, slow, and emotionally difficult.

This guide explains the two main types (financial and healthcare), why having both is important, and how to get them set up.

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