An older adult woman smiles with her hand on her chin.

Americans are living longer lives. The average life expectancy today is 76.3 years for men and 81.2 years for women, according to health research by the Centers for Disease Control and Prevention (CDC). However, with advanced years come age-related and chronic conditions. Cognitive decline and impairment or changes in attention, language, processing speed, memory, reasoning, and visual construction abilities are also associated with increasing age.

These physical and mental changes can impact an individual’s finances in the future, so planning ahead is essential. An individual never knows when their financial decision-making capacity may be affected, so it is important to consider preparing a durable power of attorney for finances. Preparing this document in advance can serve as a precautionary measure if an individual ever becomes incapacitated.

Please note that a durable power of attorney for finances is one of four types of powers of attorney. Powers of attorney are legally prepared documents that allow an individual (a principal) to designate a reliable person (an agent, also known as attorney-in-fact in some states) to make financial and health care decisions on the principal’s behalf. When they are power of attorney is durable, incapacity will not affect the power and authority of the chosen agent.

What Is A Durable Power Of Attorney For Finances?

durable power of attorney for finances is one component of estate planning.

This document is created between two trusted parties: a principal and an agent (also known as attorney-in-fact in some states). The principal (or the individual preparing this document) appoints another individual, the agent, to manage the principal’s financial affairs and make monetary decisions on the principal’s behalf.

The principal grants broad or specific powers during the appointment. Granted financial powers can include:

  • Withdrawing money, signing checks and paying bills
  • Maintaining bank, investment, and retirement plan accounts
  • Making investments
  • Managing real estate and digital assets
  • Financing and supporting long-term care
  • Applying for and managing government benefits (Please note: This management power does not apply to Social Security and Veterans Affairs (VA) benefits. For Social Security benefits, a chosen agent must apply to be a payee under the Social Security’s Representative Payment Program—for financial management. For Veterans Affairs benefits, one’s attorney-in-fact, or agent, can submit a fiduciary request for consideration to the VA Fiduciary Program, which appoints fiduciaries for those unable to manage the VA benefits).
  • Modifying trusts, providing gifts, and making donations

The principal may usually designate at least one alternate or successive agent if they choose as well. Appointing an alternate or successor may prevent the durable power of attorney for finances from expiring should the designated agent be unavailable to act when needed. Without appointing an alternate, the state will likely intervene and appoint a guardian or conservator through court proceedings to manage the principal’s financial matters.

Advantages And Disadvantages Of A Durable Power Of Attorney For Finances

An individual must set up a durable power of attorney for finances before they lose their ability to manage their affairs. Without the required competency, the principal’s document will not be valid. If an individual becomes incompetent without a durable power of attorney in place, a spouse, adult child, or another family member would likely need to work through a lengthy guardianship or conservatorship court proceeding for control of their finances.

Some of the advantages and disadvantages of a durable power of attorney for finances are discussed below:


1. Decision-making authority

When an individual creates a durable power of attorney (POA) for finances, they choose who will make financial decisions on their behalf. A court will make these decisions if an individual does not create this POA document.

2. Scope of control

Another advantage of setting up a durable power of attorney for finances is the scope of control that is granted to the chosen agent. An individual controls the granted powers that their agent will receive. They may appoint specific or general rights–the choice is up to the individual.

3. Flexibility

An individual may create a durable power of attorney for finances to reflect their personal situation. They have the authority to:

  • Determine when the POA document will take effect.
  • Select more than one agent.
  • Grant limited powers.
  • Revoke the document at any time.


1. No court supervision

When an individual signs a durable power of attorney for finances document, they give the chosen agent control of their finances and real property. However, there is no supervision or oversight of the court. There is no one assigned to monitor the agent’s actions if the principal does not or cannot do so for themselves.

2. Financial abuse

Because of a lack of monitoring, financial abuse is possible. An individual runs the risk of their selected agent not acting in their best interest.

3. Possible rejection

A durable power of attorney for finances gives an agent the ability to manage an individual’s financial affairs and make decisions. However, third-party financial institutions such as banks, credit unions, and brokerage firms may not recognize the authority of an appointed agent. Many financial institutions have their own power of attorney forms that must be completed.

Many government agencies, such as the Social Security Administration and the Department of Veterans Affairs, also do not accept powers of attorney. Instead, an individual’s agent may apply for the Social Security Representative Payee Program for the management of Social Security and SSI benefits and the Veteran Affairs Fiduciary Program for the management of VA benefits.

Contents Of The Document

Laws for the durable power of attorney for finances vary from state to state, so an individual may find it helpful to research and understand their state regulations before they begin to prepare their document.

An individual must be clear on the financial decisions they want to be carried out on their behalf and how they want them carried out. When preparing a power of attorney for finances, an individual should consider the following questions:

  • What business and personal assets do they own?
  • What debts must they pay?
  • Will they grant their agent general or narrowly defined powers?
  • Do they want the document to take effect immediately or in the future?

After answering these questions, an individual can move forward with preparing the power of attorney for finances document by:

  • Choosing their agent carefully – An individual’s agent will be their representative and make financial decisions for them when they cannot.
  • Informing their designated agent of the powers, they will grant – After choosing an agent, an individual needs to inform this person of their appointment decision. They should also make known their expectations and the powers they will grant to the agent.

Selecting An Agent  

Choosing an agent should be done after careful consideration. Nearly 1 in 20 seniors have reported elder financial exploitation and abuse, which may include the improper use of assets, money, and personal property. Many of the abusers are family members and other trusted individuals, according to the National Adult Protective Services Association (NAPSA). It is important that an individual choose an agent who will act in their best interests.

Characteristics Of An Agent

When selecting an agent, it is recommended that an individual first consider state eligibility and restriction laws. When choosing an agent, an individual should consider the following qualities:

  • Integrity and trust – Is this a person of integrity? Can I trust them to manage my money and personal property without abuse and misuse?
  • Capability and competence – Is this person capable of managing my assets? Do they have the competence needed to handle my financial affairs?
  • Dependability and responsibility – Will this person step up and do what needs to be done if I become incapacitated? Will they act in my best interest at all times?
  • Geographical location – Does this person live nearby? If they live far away, will it affect their decision-making responsibilities?
  • Organization and communication – Is this person organized enough to keep financial documents and records? Will they effectively communicate with me in this durable power of attorney for finances agency relationship? Will they effectively communicate with my family should I become incapacitated, injured, or disabled?
  • Present life responsibilities – Is this person already managing a busy schedule? Will they be available to manage my finances and property if the occasion arises?

An individual’s answers to these questions will help them in their selection process. If they are interested in also adding an alternate agent or successive agent to their durable power of attorney for finances document, they may also use these questions in their decision-making capacity.

Other Considerations

After choosing an agent and any alternates and successors, the individual should take time to discuss these things with the agent they have chosen.

  • Let the chosen agent, alternate, and successor know about one’s interest in appointing them to share one’s financial responsibilities in this capacity.
  • Inform them (if you selected more than one agent) of one’s potential financial needs and expectations.

If the person agrees to take on the responsibility of being an individual’s agent, they should be prepared to assume this role as soon as possible. The appointed agent also needs to be made aware of the following:

Talking To Family About The Selected Agent

The thought of talking to family about the person an individual will appoint as the agent for the durable power of attorney may cause some anxiety. An individual may have questions such as:

  • When is the best time to discuss this?
  • How can I tell other family members without hurting their feelings?
  • What if I tell them my decision and they don’t respect it?

Individuals should also discuss with their family who they have chosen as their agent before an infirmity, illness, or injury occurs. It is recommended that an individual take the steps they need to respectfully relay this information to the family by doing the following:

  • Practicing what they will say and how they will say it.
  • Reaching out to family and deciding on the best place and time for a face-to-face discussion. This is important, so consider privacy when deciding where to have this conversation.
  • Setting a time limit for the discussion (while deciding on a place and time).
  • Sticking to the topic of importance when the individual meets with their family: their durable power of attorney for finances agent designation.
  • Explaining their future financial desires and why they have chosen this person to carry them out.

Having this conversation early will give their family clarity concerning their financial wishes and affairs while they are alive and mentally capable. The family will likely better understand the individual’s position and let their designated person act in their best interest without conflict.

Drafting The Document

After an individual has chosen and communicated with their designated agent and family, they can make their durable power of attorney for finances official by completing and signing the necessary paperwork.

All states and the District of Columbia have power of attorney acts and rules for its creation. These acts provide requirements and limitations for principals, attorneys-in-fact, alternates and successors, witnesses, and notaries, among other information. By reading one’s state power of attorney act, they will become familiar with its laws and learn the instructions they must follow for creating this document.

An individual may complete and sign the necessary paperwork for a durable power of attorney for finances by:

  • Filling out their state’s durable power of attorney for finances statutory short form.

Many states provide standard statutory short forms for completion. These forms meet the state’s legal requirements and make clear the powers of the appointed attorney-in-fact.

Depending on the principal’s state, they should make sure they select the durable power of attorney form or include a statement. In some states, such as Texas, the principal must declare their power of attorney durable by a statement in the document. However, in other states, such as New York, the principal’s power of attorney document is durable by default unless declared otherwise.

  • Consulting with a local estate planning or elder law attorney to draft a durable power of attorney for finances documents.

If the principal consults with one of their state’s estate planning or elder law attorneys, they can get personalized help in creating their durable power of attorney for finances documents. They can also better understand state laws, so their document reflects the best decisions for their situation with validity.

Selecting An Estate Planning Or Elder Law Attorney

Gathering the needed information is important before preparing the document. Some questions to ask before an estate planning or elder law attorney drafts a durable power of attorney for financial affairs include:

  • How long have you been practicing estate planning or elder law in this state?
  • Why should an individual prepare a durable power of attorney for finances documents?
  • What information should one share with their designated person(s)?
  • Should the principal add more than one alternate and successor?
  • Should the agent and co-agents act jointly or independently?
  • Are there limits to the powers of an appointed agent?
  • Must the principal register their document with the local court?
  • Are there any disadvantages to should consider?
  • What happens if the principal decides to revoke granted powers?
  • Will third parties such as banks and credit unions accept a durable power of attorney for finances and its agent authority?
  • What is your average cost for drafting a durable power of attorney for finances document?

If an individual has any other questions, they should ask these as well. The individual should plan for and note financial issues and concerns in their document. Getting the answers, they need from their chosen attorney will prove helpful when drafting the durable power of attorney for finances document.

Cost Of Preparing The Document

The cost of preparing the document will depend on whether the principal uses the state’s statutory power of attorney form or hires an attorney.

If an individual creates the document using the state’s standard statutory form, they may print it for free from their state’s legislature or secretary of state website. If the document must be notarized and recorded, there will also be fees for these services.

If the principal hires an estate planning or elder law attorney to draft the durable financial power of attorney, these fees may cost anywhere from $50-300+ depending on:

  • The principal’s chosen attorney
  • The principal’s financial needs
  • The principal’s marital status and complexities

An individual may find it helpful to contact a few attorneys of interest with price questions to receive service estimates.

Seniors may be eligible for a free or low-cost rate on elder law attorney services. If an individual is 60 years or older, they may obtain more information by contacting the American Bar Association in their state.

Executing The Document

All states and the District of Columbia accept durable powers of attorney for finances, but there are some differences from state to state. Before the document becomes valid, it must be “executed,” which usually refers to signing and dating the document in front of witnesses if required.

In most states, the completed document requires the principal’s signature, the agent’s signature (in a few states), and the signature of at least two disinterested witnesses or a notary public. The principal may choose someone else to sign on their behalf if they are unable to sign themselves.

If the principal is granting their agent real estate responsibilities and powers, depending on one’s state, the principal will need the signature of a notary for validation. In such cases, the principal might also be responsible for recording their durable financial power of attorney with their County Clerk’s office.

The durable power of attorney for finances will become effective right away unless the principal includes springing powers in their document. If an individual chooses springing powers, the powers of their chosen agent will not become effective until the declaration of legal incapacity or disability. In this case, the durable power of attorney for finances will take effect when at least one doctor, psychologist, and lawyer or judge (depending on state law) evaluates and states the individual’s incapacitation to handle financial matters.

Upon execution, the durable power of attorney for finances will generally remain valid until death or revocation. However, the principal may revoke the document at any time while they are competent and of sound mind.

It is important to note that in some states, the principal party may not have the opportunity to make their agent’s powers effective only upon incapacity or disability, so knowledge of state laws before drafting the document is important. If one’s state laws permit, third parties may require proof of incapacity from the agent should the principal become incapacitated in the future.

In addition, a durable power of attorney for finances will not give one’s chosen agent the authority to make medical decisions. For those decisions, an individual will need to prepare a durable power of attorney for healthcare and/or a living will.

Who May Execute The Document?

State laws govern the validation of durable power of attorney (POA) for finances. However, any adult individual 18 years old and older may appoint an agent under the durable power of attorney for finances for financial purposes.

Capacity requirements vary by state. When executing this document, the principal must be of a sound mind, meaning the principal understands the nature of a durable financial power of attorney and its effects. In other words, if an individual executes a durable power of attorney for finances, they must:

  • Understand and comprehend the action they are taking in appointing someone else over their finances.
  • Understand and comprehend why they are granting someone else power to act on their behalf.
  • Understand and comprehend what will happen after their designation becomes effective.

The document will not be valid if the principal lacks the understanding and comprehension required during execution. To avoid capacity issues when executing a durable power of attorney for finances, it is important to prepare this legal document as soon as possible. It is also important to note that the principal’s chosen agent must also meet these capacity requirements when the document is executed.

Distributing The Document

The principal may also give their agent, alternate, and successor personal copies of their durable power of attorney for financial documents if they choose. However, if an individual is uncomfortable with the advance distribution of this document, an individual may instead let them know the exact location of their original durable power of attorney for finances document for future use.

Presenting copies to the principal’s financial and government institutions may also benefit the agent.

Storing The Document

One’s chosen estate planning or elder law attorney may be willing to store the original document, so this is important to inquire about.

Another option for storing the durable power of attorney for finances form is one’s residence. At home, the principal should keep the newly created legal document in a safe but accessible place. They should properly store and protect their durable power of attorney for finances from disastrous events, alterations, thefts, and accidents.

When selecting a place for storage, the principal may also consider the location’s accessibility. The principal should store the original and copies where their agent and alternate may find and access them when needed. The American Association of Retired Persons (AARP) recommends a fireproof box for safekeeping.

The principal may also inform their agent and alternate about the location of their durable power of attorney for financial documents after storing.

Revoking The Document

A yearly review of a durable power of attorney for finances is important. If the principal changes their mind about their financial decisions and wishes, their chosen agent, and/or their appointed powers, they may revoke their durable power of attorney for finances while legally competent.

In some states, the principal may revoke their durable power of attorney for finances by written declaration. In other states, the principal may destroy the old durable power of attorney for finances and execute a new one to replace it, noting a revocation of the previous document’s terms. The principal is not required to sign their durable power of attorney for finances revocation in the presence of a couple of witnesses or a notary public but may do so if they choose.

If the principal revokes their durable power of attorney for finances, they should be sure to inform their agent, preferably in writing (and their alternate and successor if any were added), as well as their financial and government institutions. If an individual filed and recorded the original document with the County Clerk’s office, they should also record the revocation there.

Court Conservatorship And A Living Trust: Alternatives To The Durable Power Of Attorney For Finances

Financial abuse is a growing problem for seniors. If an individual has concerns over trusting another person to manage their finances and property with legal authority, they may consider these two alternatives to the durable power of attorney for finances: a court conservatorship (also called guardianship) and a living trust.

An individual will need someone to manage their property, money, and other assets should they become incapacitated. If they do not appoint this person themselves, the court will likely appoint a qualified conservator (or court-appointed guardian) to handle their financial affairs under a court conservatorship.

Under a legal conservatorship, the person who is incapacitated is known as the ward, and the person who is appointed to manage the ward’s finances is known as the conservator or guardian. The conservator or court-appointed guardian becomes the ward’s fiduciary or the person legally responsible for managing the ward’s finances, and they must act in the ward’s best interest.

Unlike an agent under a durable power of attorney for finances, a conservator or guardian usually takes an oath of compliance and must regularly report to a judge for performance monitoring. If there are signs of financial abuse, the court may terminate the conservatorship.

Some states have different purposes for guardianships and conservatorships. For example, in some states, a legal guardianship appoints a guardian to manage the welfare affairs of the ward, whereas a legal conservatorship appoints a conservator to handle the ward’s financial affairs only.

Another alternative to a durable power of attorney for finances is a living trust. A living trust is a type of inter vivos trust created by an individual consumer known as a grantor. A living trust allows the grantor to set up and manage their assets in a named trust account. They may also include instructions for the distribution of their assets when they pass away.

Rules for living trusts vary from state to state. However, when an individual sets up a living trust, they transfer their assets to a trust. An individual may serve as their own trustee managing the trust’s affairs and distribution instructions.

An individual may set up a living trust as revocable or irrevocable. With a revocable trust, an individual controls their assets and may revoke the document at any time. With an irrevocable trust, an individual no longer has control of their assets and cannot change or cancel the terms of the trust.

FAQs About Durable Power Of Attorney For Finances

The decision to set up a durable power of attorney for finances is an important one so an individual will likely have many questions before creating this document. The following are some commonly asked questions about the durable power of attorney for finances.

1. What will happen if a person loses their financial decision-making ability if they do not have a durable power of attorney for finances?

After an assessment and determination of the individual’s mental capacity status, a probate court may intervene and do one of the following:

  • Make financial decisions for the individual.
  • Appoint a conservator or guardian to manage the individual’s financial affairs.

2. Must a person’s chosen agent be an attorney-at-law? 

No. Power of attorney laws does not require a person’s agent to be an attorney-at-law.

3. Why should an individual create a durable power of attorney for finances when they already have a will? 

When an individual creates a durable power of attorney for finances, they appoint an agent to manage their financial affairs. They make this appointment when they can determine when the agent’s powers will become effective.

When an individual creates a last will and testament, they make known their end-of-life wishes concerning real property distribution and name an executor to carry out these wishes upon their death.

When combined, a durable power of attorney for finances document will protect an individual’s financial interests while they are alive, while a last will and testament will protect their interests once they have passed away.

4. How does an agent under a durable power of attorney for finances differ from a health care agent under a durable power of attorney for health care? 

An individual may use durable powers of attorney to appoint both an agent for finances and a health care proxy. However, an agent (appointed under a durable power of attorney for finances) handles financial matters, while a health care proxy (appointed under a durable power of attorney for health care) handles health and medical matters.

5. Can a person still handle their financial affairs after preparing a durable power of attorney for finances document? 

Yes. Individuals can still manage their own financial affairs while they have the capacity needed to make financial decisions. However, if they become legally incapacitated, their chosen agent may assume full decision-making control.