Financial Power Of Attorney

DEFINITION of 'Financial Power Of Attorney'

A financial power of attorney grants a trusted agent (also called an attorney-in-fact) the authority to act on behalf of the principal (the person granting authority) in financial matters.

 

BREAKING DOWN 'Financial Power Of Attorney'

A financial power of attorney (also known as a general power of attorney or a power of attorney of property) gives the agent the power to manage the financial life of the principal when he or she is unable to do so. (See Power Of Attorney: Do You Need One?)

The agent can legally manage the principal's finances and property, make all financial decisions and conduct all financial transactions (unless the power of attorney specifically limits his or her authority). The agent is legally obligated to make decisions consistent with the wishes of the principal, but has full authority to make autonomous decisions until that authority is challenged and revoked in a court of law.

In some states, financial powers of attorney are automatically considered "durable," meaning they remain in effect after the principal becomes incapacitated. In others, if you want them to be durable, you need to put that information into the power of attorney in addition to other specifics of which powers you are granting.