Power of Attorney: What It Is and Why You Need One

Most people think about estate planning in terms of what happens after they die. But some of the most important planning you can do is for a scenario where you are still alive — just unable to make decisions for yourself.

That is where a power of attorney comes in.

A power of attorney (POA) is a legal document that authorizes someone you trust to act on your behalf. It is one of the most important documents in any estate plan, and one of the most commonly overlooked — until it is urgently needed.

When you sign a power of attorney, you (the "principal") grant authority to another person (the "agent" or "attorney-in-fact") to make decisions and take actions on your behalf.

The scope of that authority depends on how the document is written. A power of attorney can be:

• Broad or limited — covering all financial matters, or restricted to a specific transaction (like selling a particular piece of real estate)
• Immediate or springing — effective right away, or only triggered when a specific condition is met (such as a physician certifying incapacity)
• Durable or non-durable — remaining effective if you become incapacitated, or terminating if you do

For most estate planning purposes, a durable power of attorney is what you want.

A standard (non-durable) power of attorney automatically terminates if you become mentally incapacitated. That is precisely the opposite of what most people need.

A durable power of attorney remains in effect even if you lose capacity — which is exactly when you need it most. The word "durable" refers to this staying power.

Under Pennsylvania law, a power of attorney is presumed to be durable unless the document specifically states otherwise. But the document must be properly executed — signed before a notary and two witnesses — to be valid.

Depending on how the document is written, your agent under a durable power of attorney may be able to:

• Pay your bills and manage your bank accounts
• File your tax returns
• Manage your investments and retirement accounts
• Buy or sell real estate on your behalf
• Apply for government benefits, including Medicaid
• Run your business in your absence
• Make gifts on your behalf (if expressly authorized)

Pennsylvania law requires that certain powers — like the ability to make gifts, change beneficiary designations, or create trusts — be explicitly granted in the document. A well-drafted POA addresses these specifically.

It is equally important to understand the limits:

• It does not cover healthcare decisions. A financial POA handles money and property. For medical decisions, you need a separate document — a healthcare power of attorney or healthcare proxy.
• It terminates at death. Once you die, your agent's authority ends. Your executor (named in your will) takes over.
• It does not override your own decisions. As long as you have capacity, you can still act for yourself. The agent's authority is concurrent with yours, not a replacement.

Here is the hard truth: you cannot sign a power of attorney after you have lost capacity. The document requires that you understand what you are signing and that you are acting voluntarily.

If you become incapacitated without a durable POA in place, your family may have no legal authority to manage your finances. They cannot access your bank accounts, pay your mortgage, or handle your affairs — even with the best intentions.

The alternative is a court-supervised guardianship or conservatorship proceeding. That process is expensive, time-consuming, and public. It can take months, during which your bills go unpaid and your assets sit frozen.

A durable power of attorney prevents all of that. It is a relatively simple document that can save your family enormous stress and expense.

Your agent will have significant authority over your financial life. Choosing the right person matters.

Look for someone who is:

• Trustworthy — this is the most important quality
• Organized and detail-oriented — managing finances requires attention to paperwork
• Available — they need to be reachable and able to act when needed
• Willing to serve — always ask before naming someone

You can name a co-agent (two people who must act together) or a successor agent (a backup if your first choice is unable to serve). Many people name a spouse as primary agent and an adult child as successor.

As mentioned above, a financial POA does not cover medical decisions. For that, you need a healthcare power of attorney (also called a healthcare proxy or healthcare agent designation).

This document names someone to make medical decisions on your behalf if you are unable to make them yourself — decisions about treatment, surgery, medications, and end-of-life care.

A healthcare POA works alongside a living will (also called an advance healthcare directive), which documents your specific wishes about life-sustaining treatment. Together, these documents ensure your medical wishes are known and respected.

A complete estate plan typically includes:

1. A will — directing where your assets go at death
2. A durable financial power of attorney — authorizing someone to manage your finances if you are incapacitated
3. A healthcare power of attorney — authorizing someone to make medical decisions for you
4. A living will / advance directive — documenting your wishes about end-of-life care
5. Possibly a trust — depending on your assets and goals

Each document serves a different purpose. Together, they cover both the during and the after.

The time to create a power of attorney is when you are healthy and clear-headed — not when you are in the hospital or facing a diagnosis. Once capacity is gone, the window closes.

At Berkleigh Law, we help individuals and families throughout Berks County create the documents they need to protect themselves and the people they love. If you do not yet have a durable power of attorney, we would be glad to help you get one in place.