Understanding the Role and Responsibilities of a Power of Attorney (POA)

May 22, 2025

By Michael Owens, CFF, CRPS
Carolina Financial Services Group

When it comes to estate planning, being named as someone’s Power of Attorney (POA) is both an honor and a significant responsibility. Whether you’re considering granting someone this authority or you’ve been appointed yourself, it’s essential to understand what this role entails and how it can impact both the principal (the person granting the authority) and the agent (the person appointed).

What Is a Power of Attorney?

A Power of Attorney is a legal document that allows one person (known as the agent or attorney-in-fact) to act on behalf of another (the principal). The powers granted in this document can vary significantly depending on how it is written.

There are two main types of POAs:

  • Immediate POA: Becomes effective as soon as the document is signed.
  • Springing POA: Only becomes effective if the principal becomes incapacitated. However, because proving incapacity can be complex, this type is less commonly used in modern estate planning.

Understanding the specific terms of the POA you hold is critical, as these terms determine what you can—and cannot—do.

Responsibilities of a Power of Attorney

When you are named as a POA, you are legally authorized to act on the principal’s behalf, especially in situations where they are unable to manage their affairs due to illness or disability. Some of the most common duties you may be asked to perform include:

  • Managing Finances: Overseeing the principal’s financial affairs and ensuring bills are paid.
  • Banking: Accessing and managing bank accounts.
  • Insurance: Handling insurance matters, including policy management and claims.
  • Estate Documents: Maintaining estate planning documents safely and accurately.
  • Filing Taxes: Preparing and submitting the principal’s tax returns.
  • Safe Deposit Boxes: Managing access to and contents of safe deposit boxes.
  • Real Estate: Handling transactions such as buying, selling, or leasing property.
  • Record-Keeping: Keeping detailed logs of financial transactions and any expenditures, especially if you’re seeking reimbursement.

Being diligent and transparent with records is not only smart—it’s often legally required.

What You Cannot Do as a POA

Despite the broad powers a POA can provide, there are clear boundaries to this role:

  • You cannot write, amend, or revoke wills, trusts, or estate plans (in most states).
  • You cannot vote in public elections on behalf of the principal.
  • You cannot act outside of what is specifically permitted in the POA document.
  • You cannot transfer the principal’s assets into your own name unless the document explicitly allows it.
  • You cannot borrow or lend money on the principal’s behalf without express permission in the document.

What Makes a POA “Durable”?

A Durable Power of Attorney remains in effect even if the principal becomes mentally or physically incapacitated. This is a key distinction—without this durable component, a POA would lose its effectiveness once the principal is no longer able to make decisions.

Final Thoughts

Being named as someone’s POA is a powerful role in estate planning and should be approached with care, integrity, and a full understanding of what it entails. It’s not just about having access to someone’s finances—it’s about acting in their best interest and within the boundaries of the law.

If you’ve been appointed as a POA, take time to review the document closely. Understand what you are authorized to do, and seek legal guidance if anything is unclear.

Have questions or need help navigating your responsibilities? Don’t hesitate to reach out—support is always available to help you fulfill this important duty with confidence and clarity.

Stay Flexible. Stay Informed.

If you have questions about how this outlook affects your retirement journey, I’d love to talk.

📞 (252) 215-9095
📧 mowens@cfsgroup-nc.com

This blog provides a general overview of powers of attorney and the roles and responsibilities associated with them. It is not exhaustive and does not include state-specific details, which can vary significantly. This information is intended to introduce you to the basic concepts and types of powers of attorney available, but it is not a substitute for professional legal advice. For questions or to address specific circumstances, please consult with a qualified legal professional.