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(6-minute Richmond Refreshers video below — full article follows)

If you’ve been named as someone’s Power of Attorney (POA) — or you’re thinking about who to name in your own plan — it’s important to understand what that role actually means.

A Power of Attorney is more than just a signature on a document. It’s a legal responsibility and an act of trust that can have a major impact on your loved one’s financial life — and yours.

What Is a Power of Attorney?

A Power of Attorney (POA) is a legal document that gives one person (the agent) authority to act on behalf of another (the principal).

Most people create a Power of Attorney as part of their overall estate plan. It’s a proactive way to make sure that if they can’t make decisions in the future — because of illness, injury, or incapacity — someone they trust can step in to help.

Without a valid Power of Attorney, families may have to go through the courts to obtain decision-making authority. That process can be stressful, time-consuming, and expensive — especially during an already emotional time.

Types of Powers of Attorney

Not all POAs are the same. Here are the most common types you might encounter:

• Immediate Power of Attorney: Takes effect as soon as it’s signed.
• Springing Power of Attorney: Only becomes effective if the person becomes incapacitated (though proving incapacity can be challenging).
• Durable Power of Attorney: Remains in effect even if the principal becomes physically or mentally incapacitated.

Most estate planners prefer a Durable Power of Attorney because it ensures continuous authority when it’s needed most.

Financial vs. Healthcare POAs

It’s also important to know that there are usually two different types of POAs — one for financial decisions and another for healthcare decisions.

The Financial POA allows someone to manage financial affairs — like paying bills, handling bank accounts, or managing property.
The Healthcare POA, sometimes called a medical or healthcare proxy, authorizes decisions about medical care, treatment, or placement in assisted living or nursing facilities.

They work together, but they’re separate documents — and both are vital parts of a well-rounded estate plan.

What a Power of Attorney Can Do

If you’re named as someone’s Power of Attorney, you may have the authority to:

• Pay bills and manage bank accounts
• Handle insurance and tax matters
• Access safe deposit boxes
• Manage investments or financial documents
• Sign documents related to real estate or property
• Keep important estate planning records safe and organized

Think of it like temporarily stepping into someone else’s financial shoes to help them when they need it most.

What a Power of Attorney Cannot Do

A Power of Attorney doesn’t give unlimited authority. You cannot:

• Change or revoke estate planning documents like wills or trusts
• Transfer assets into your own name
• Vote on behalf of the principal
• Make decisions outside the scope of the document

Your role is to act in the best interest of the principal, within the authority specifically granted in the POA.

It’s also important to note: being listed as a Power of Attorney for a bank or financial account doesn’t necessarily grant authority everywhere. The document itself — not the title — determines what you can and cannot do.

Your Responsibilities as a Power of Attorney

If you’re serving as someone’s POA, your role is rooted in trust and transparency.
Here are a few key responsibilities to keep in mind:

• Keep detailed records. Document every transaction, bill payment, and reimbursement.
• Stay within your authority. Review the POA document to understand exactly what’s allowed.
• Communicate openly. Let the principal’s financial and legal professionals know you’ve been named, so everyone is coordinated if action is needed.
• Act in good faith. Always make decisions that align with the principal’s best interests — not your own.

Good recordkeeping and communication not only protect you legally, but also strengthen the trust placed in you.

Why This Matters

At Richmond Brothers, we often see families include a Power of Attorney in their estate plan — but they don’t always talk through what it really means.

Naming someone is just the first step.
The true value lies in understanding the role, communicating expectations, and coordinating that decision with the rest of your financial and legacy plans.

Because when life changes unexpectedly, clarity and preparation can make all the difference.

How We Can Help

If you’ve been named as someone’s Power of Attorney — or if you’re choosing who to name — our team can help you understand how this role fits into your overall financial strategy.

We often coordinate with clients’ attorneys and tax professionals to ensure all parts of your plan work together seamlessly.

Schedule a complimentary 20-minute visit to explore your questions and learn how thoughtful planning can make life easier for the people you love most.

This content is for informational purposes only and should not be construed as personalized legal, tax, or investment advice. Richmond Brothers, Inc. is an independent Registered Investment Adviser. For legal guidance regarding Power of Attorney documents, please consult your attorney.