A document authorizing someone to act on another person's behalf in financial or legal matters.
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A power of attorney is a written authorization for one person, the agent, to act for another, the principal. It can be broad or narrow - some are written for a single transaction - and it is a delegation of authority rather than a transfer of ownership: the principal keeps their property and, while they have capacity, can revoke the document.
The word durable is the one that matters. An ordinary power of attorney ends if the principal loses capacity, which is precisely when it is most needed; a durable power of attorney is written to survive incapacity. A separate document usually covers health care decisions, and a financial power of attorney generally does not extend to them.
A power of attorney ends at death, at which point authority passes to whoever administers the estate. The agent owes duties to the principal and can be held accountable for abusing the authority - misuse by a trusted person is a recognized category of elder financial abuse.
Under the Uniform Power of Attorney Act, a power of attorney is durable unless it expressly says otherwise (UPOA § 104), which reverses the older default. Some powers are too dangerous to be implied from general language and must be granted expressly. These include creating, amending or revoking a trust, making a gift, creating or changing rights of survivorship, changing a beneficiary designation and delegating the agent's authority (§ 201(a)). An agent must act in good faith, within the scope of the authority granted, and according to the principal's reasonable expectations, and must keep a record of receipts, payments and transactions made for the principal (§ 114). The Act also protects a third party who accepts a document in good faith, and in the states that adopt its optional section it can make a third party who refuses a valid document without a recognized reason liable for the cost of a court order (§§ 119-120).
The two recurring problems are documents that turn out not to be durable, and documents that banks or title companies decline to accept because they lack a formality or specific authority the state requires. Both are cheap to prevent at drafting and difficult to fix once capacity is lost.
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Other entries in the same area of law, each written from the same primary sources.