A Power of Attorney (POA) is a legal document that authorizes someone (your "agent" or "attorney-in-fact") to act on your behalf. Choosing the right type and the right agent is a critical part of estate and incapacity planning.
General POA: Gives your agent broad authority to manage your financial affairs — banking, investments, real estate, taxes, and more. Typically ends if you become incapacitated.
Durable POA: Same broad authority as a general POA, but continues to be effective if you become mentally incapacitated. This is the most commonly recommended type for estate planning.
Limited (Special) POA: Grants authority for specific transactions or time periods only. Example: authorizing someone to sell a specific property or manage affairs while you're traveling.
Springing POA: Only becomes effective upon a triggering event, usually mental incapacity. Can create delays in activation because incapacity must be formally determined.
Healthcare POA: Authorizes your agent to make medical decisions on your behalf if you're unable to communicate your wishes. Separate from financial POA.
Select someone you trust completely, who is financially responsible, available and willing to serve, organized and good with paperwork, and who understands your values and wishes.
Consider requiring your agent to keep records, setting spending limits, naming a successor agent, and requiring co-agents for large transactions.