How to Set Up Power of Attorney for Finances

Learn how to create a financial power of attorney to protect your money and assets if you become unable to manage them yourself.

  1. Choose your agent carefully. Pick someone you trust completely with money — your spouse, adult child, sibling, or close friend. This person will have access to your bank accounts, investments, and ability to make financial decisions on your behalf. Choose someone who lives nearby, understands basic finances, and won't be overwhelmed by the responsibility.
  2. Decide between durable and springing power. A durable power of attorney takes effect immediately and continues if you become incapacitated. A springing power only activates when you're declared unable to make decisions by a doctor. Durable is simpler and more commonly used, while springing provides more control but can create delays when banks need medical documentation.
  3. Define the scope of financial powers. Decide what your agent can do — manage bank accounts, pay bills, file taxes, buy or sell investments, or handle real estate transactions. You can grant broad powers or limit them to specific tasks. Most people choose comprehensive powers to avoid your agent being blocked from necessary actions during emergencies.
  4. Get the document prepared legally. Use your state's official power of attorney form or have an estate planning attorney draft one. The document must meet your state's specific requirements for signatures, witnesses, and notarization. Some states require two witnesses plus notarization, while others only need notarization.
  5. Execute and distribute copies properly. Sign the document in front of required witnesses and a notary. Give copies to your agent, backup agent, primary bank, financial advisor, and attorney. Store the original in a safe but accessible place. Some banks require their own forms, so check with major financial institutions you use.
  6. Review and update as life changes. Review your power of attorney every 3-5 years or after major life events like marriage, divorce, or death of your chosen agent. Some very old documents may be rejected by banks, so consider updating every 10 years even if nothing changes. Always revoke old versions in writing when creating new ones.