by Gary Foreman

A power of attorney is a valuable tool to help you care for a loved one’s financial affairs. Used correctly it can save you both time and money.

It could happen to you or to your elderly parent. You’ve had an accident or a medical problem. For a few hours, a few days, maybe longer, you’re unable to take care of your financial affairs. Checks can’t be written. Decisions can’t be made. There’s an answer. It’s a document called a “power of attorney.” Let’s examine what retirees need to know about powers of attorney.

To help us understand how powers of attorney work and what they can do, we asked Kimberly J. Howard, CFP of KJH Financial Services to help. Ms. Howard is a fee only financial planner. She answered a number of our questions about these important legal documents.

Q: In layman’s terms, what is a power of attorney?

Ms. Howard: Giving someone the power to act on your behalf.

Q: What’s the difference between a limited power and a general power of attorney?

Ms. Howard: Limited Power of Attorney is used when you want someone to act on your behalf in a certain circumstance. General Power of Attorney is the most powerful because you are giving someone else a broad range of powers.

Q: Is there a time limit for a power of attorney?

Ms. Howard: If you want the power of attorney to be for a limited time frame, then it must be spelled out in the document.

Q: Can a power of attorney be used after the granter dies?

Ms. Howard: The power of attorney dies, or is no longer valid, with the granter.

Q: Are there certain things that cannot be done using a power of attorney?

Ms. Howard: A power of attorney can be used for all legal and financial matters.

Q: Must you have a lawyer draw up the paper? Or can a layman write his or her own?

Ms. Howard: Anyone can draw up a power of attorney, but doing so could cause more harm than good.

There you have it. A power of attorney is a valuable tool to help you care for a loved one’s financial affairs. Used correctly it can save you both time and money.

• Trust Basics for Retirees
• What Is a Power of Attorney and Do You Need One?
• What Is a Revocable Living Trust?
• What About Wills and Health Care Advanced Directives?
• How an Elder Law Attorney Can Help Elders and Caregivers

Reviewed May 2020

About the Author

Gary Foreman is the former owner and editor of the After50Finances.com website and newsletter. He's been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money, Credit.com and CreditCards.com.