A power of attorney (a “POA”) is a legally binding document granting another individual power to act in your place. The signer of a POA can dictate the scope of the power: it can be for a particular transaction (such as signing for the purchase of a house), a particular category of transactions, or for any and all transactions.

If you give someone power of attorney, does that make them your lawyer?

No. The phrase uses the word attorney in its original sense: “one appointed by another to stand in his place.”

Why sign one?

People often sign financial and medical POAs to allow their family and loved ones to access bank accounts and conduct other necessary transactions while they’re incapacited due to a health condition. But you might also use a POA for convenience. For instance, if you want to purchase a house but you’re out of the country on business the day of closing, an agent designated in your POA might be able to sign for you.

Potential Pitfalls

The Texas legislature created a template durable POA that anyone can use. You can pick and choose which powers you want to grant by checking the appropriate boxes. While the form is designed to be easy to use, there are some ambiguities that could cause problems down the road. Here are some things to watch out for:

• Your agent may do something against your wishes.

Once you’ve given someone the power to sign on your behalf, they could make decisions for you that you don’t agree with. For business purposes, you should limit the scope of the POA as much as possible, for example to a particular purchase or business transaction. If you’re granting someone a financial POA for while you’re incapacitated, make sure you pick someone you trust and who knows you well.

• Your agent may not fully understand your wishes.

In Texas, your agent is obligated to follow your intentions as expressed in your will. But in an ironic twist, they might not be able to get access to your will! (Due to confidentiality restrictions.) Consider adding language in your POA saying your attorney is authorized to show your agent your will. This is important because the Texas form grants agents power to make major estate planning actions, such as creating trusts in your name and changing beneficiary designations on bank accounts.

• Your agent may themselves become incapacitated.

What happens if you’re in a coma, your POA kicks in, and then your agent gets hit by a car? Not a fun prospect to consider. What happens is that a court proceeding takes place to appoint a guardian. That means attorneys’ fees and lots of time before anyone can manage your affairs. Consider including a successor agent in your POA, who would take over in the event of your primary agent’s inability to do so.

• Some people may not accept your power of attorney.

Though POAs are legally enforceable, not everyone is familiar with them. They could slow down transactions as banks run them through their legal departments. If you do name a successor agent, it’s wise to include language stating that anyone receiving the POA may rely on the agent’s certification that he or she has been appointed. Otherwise, someone asked to trust the POA may worry that the original agent — not the successor — is still the one with rightful power.