What is a Power of Attorney (POA), and why would you need one? Whar do you need to know about choosing the right Power of Attorney for finances and healthcare? How does all this factor into your larger Estate Plan?
By James L. Cunningham Jr., Esq.
Let’s be honest: the phrase “Power of Attorney” sounds like you’re hiring a lawyer to represent you in court. But you’re not. A Power of Attorney (POA) is a legal document that lets someone act on your behalf. It’s incredibly important, and it’s one of the most misunderstood tools in estate planning. People often think they know what it does—until they try to use one and discover they were wrong.
That’s why we’re breaking it down in this article. By the end, you’ll understand the major types of Powers of Attorney, how they fit into your Estate Plan, and which one might be right for you. Also see this detailed blog about when and how to use a Power of Attorney.
What Is a Power of Attorney?
At its core, a Power of Attorney is “agency authority.” You—the principal—give another person—the agent—the power to act as if they were you while you are alive. That could mean managing your bank accounts, making medical decisions, or even signing your tax return.
There are two common types of Power of Attorney:
- Durable Power of Attorney for Property and Personal Affairs (financial and legal decisions).
- Power of Attorney for Healthcare (medical decisions if you can’t speak for yourself).
When Would You Need a Power of Attorney?
A Power of Attorney is essential any time you want someone you trust to step in and make financial, legal, or healthcare decisions on your behalf. You don’t have to be elderly or sick to need a Power of Attorney. Real-life scenarios include the following.
Incapacity: Able develops advanced Alzheimer’s and can no longer manage daily life. His agent pays bills and makes decisions.
Accident: Tom suffers a brain injury. His parents use his Durable Power of Attorney and Advance Health Care Directive to handle medical care and legal matters.
Travel: Margaret and John head to Spain for a year. A pipe bursts at home. Their daughter, as agent, arranges repairs and deals with insurance. They keep sipping sangria while she handles the mess.
College Students: Once kids turn 18, parents lose the right to step in. With a Power of Attorney, Sarah’s parents can manage tuition payments and access medical care while she studies abroad.
What is a Durable Power of Attorney?
A Durable Power of Attorney for Property and Personal Affairs is the workhorse of your estate plan when it comes to money and legal decisions. With this document, you appoint an agent (sometimes called an “attorney-in-fact”) to step into your shoes and handle financial matters if you can’t.
Your agent can:
- Pay bills and everyday expenses so nothing slips through the cracks
- Manage investments and bank accounts to keep your finances running smoothly
- Buy or sell real estate or other property if needed
- Handle insurance claims, tax filings, and retirement accounts like IRAs and 401(k)s
Why is it called Durable Power of Attorney? Because it stays valid even if you become incapacitated due to illness, dementia, or an accident. Without it, your family may be forced into an expensive and time-consuming conservatorship just to manage your affairs.
Here’s the key limitation: a Durable Power of Attorney dies when you do. Once you pass away, the authority your agent had ends immediately. That’s where your Living Trust or Will steps in to control what happens to your assets.
Many people think naming a child or spouse as agent gives them ownership of the assets. Not true. Your agent doesn’t own your property—they only have authority to act on your behalf. If your son decides your IRA account looks like a great Vegas fund and blows it all on blackjack, that’s not inheritance—it’s embezzlement.
Springing vs. Immediate Power of Attorney: What’s the Difference?
When you set up a Durable Power of Attorney, one of the key decisions is whether you want it to be immediate or springing. Both are valid, but they work very differently.
An immediate Power of Attorney is effective right away—the moment you sign it. Your agent can act on your behalf even if you are perfectly healthy and capable. This type of power of attorney is commonly used for convenience, such as if you’re traveling, active military deployed overseas, or simply want a spouse or adult child to help with finances.
A springing Power of Attorney only takes effect if you become incapacitated. It usually requires a doctor’s certification (sometimes two doctors) that you are unable to make decisions. The springing power of attorney is designed to protect you from misuse while you are healthy—but it can create delays in emergencies if paperwork is required.
The choice of springing vs. immediate power of attorney ultimately depends on your comfort level and family dynamics.
What is a Power of Attorney for Healthcare?
A Power of Attorney for Healthcare—sometimes called a Medical Power of Attorney— allows you to appoint a trusted person, known as your healthcare agent or proxy, to make medical decisions on your behalf if you are unable to communicate.
Imagine a medical emergency: you’re unconscious, in surgery, or suffering from dementia. Without a Healthcare Power of Attorney in place, your family could face costly delays, bitter disputes, or even end up in court fighting over what to do next.
With a Healthcare Power of Attorney, your chosen agent can:
- Approve or refuse medical treatments based on your wishes
- Select or change doctors, hospitals, or care facilities
- Make decisions about long-term care, hospice, or palliative care
- Access your medical records (often with the help of a HIPAA Authorization)
This isn’t just about end-of-life choices—it’s about planning so that you get timely, appropriate care throughout your life. A Healthcare Power of Attorney works hand-in-hand with an Advance Health Care Directive or Living Will, giving your loved ones clear instructions and avoiding unnecessary conflict. These are all key elements in a California estate plan.
Other common healthcare documents include a POLST (Physician Orders for Life-Sustaining Treatment), which works alongside an Advance Health Care Directive. Read more in this article to understand how they differ and when each is used.
Choosing the Right Power of Attorney
So, which Power of Attorney is right for you? The answer depends on your life, your assets, and your comfort level. For most people, the best approach is not “either/or” but “both/and”: one for financial matters and one for healthcare, often paired with an Advance Health Care Directive.
It’s also important to understand what a Power of Attorney cannot do. A Power of Attorney is powerful during your lifetime, even if you become incapacitated—but it ends the moment you die. That means your agent can no longer act for you after death.
If you want your assets managed and distributed smoothly after you’re gone, you’ll need a full Estate Plan, typically including a Living Trust. Unlike a POA, a Revocable Living Trust keeps working long after you’re gone, avoiding probate and giving your loved ones instructions.
For even more detail on this topic, please see this detailed blog about when and how to use a Power of Attorney.
Beyond Powers of Attorney: The Complete Estate Plan
A solid estate plan isn’t just one document. Along with Powers of Attorney, in California, you’ll likely need:
- Revocable Living Trust
- Pour-Over Will
- Guardian nominations for minor children
- Beneficiary designations for retirement accounts, IRAs, and life insurance
- HIPAA Authorization
- Deeds to property
Each plays a role in handling your affairs smoothly—without unnecessary court involvement.
Bottom line: Don’t think of it as picking just one Power of Attorney. Think of it as building a complete estate planning toolkit. With the right combination, you’ll stay protected during life and create a plan for your wishes to be carried out after death.
What We Do
The lawyers and staff at CunninghamLegal help people plan for some of the most difficult times in their lives; then we guide them when those times come.
Our experienced legal team specializes in Estate Planning, Tax Planning, Business Law, and Asset Protection to help protect your wealth and legacy for generations to come. With offices across California, we offer in-person, phone, and Zoom consultations to make expert legal guidance accessible wherever you are.
Many of our clients also find our legal webinars invaluable. We cover a wide range of essential topics, including California-specific issues.
Ready to take the next step? Call us at (866) 988-3956 or schedule an appointment online.
Warm regards, Jim
James L. Cunningham Jr., Esq.
Partner, CunninghamLegal
At CunninghamLegal, we guide savvy, caring families in the protection and transfer of multi-generational wealth.
