The rights of a power of attorney belong to the document, not the person named in it. An agent can do whatever the principal’s power of attorney says they can do, nothing more, and every act must serve the principal rather than the agent. The scope might cover every financial account the principal owns or a single signature on a single afternoon. What the agent can actually do depends on which type of power of attorney was signed, what powers the document spells out, and the limits state law places on certain sensitive acts like gifting and self-dealing.
The Type of Power of Attorney Sets the Ceiling
Before looking at any specific right, check which kind of power of attorney was signed. The type decides how broad the authority is and whether it still works when the principal most needs it.
A general power of attorney grants broad authority over financial and legal matters: banking, investments, contracts, property, and most other business the principal would handle personally. It takes effect at signing and remains in force until the principal revokes it or loses mental capacity.
A limited (or special) power of attorney confines the agent to one task or a defined time window. Selling a specific property, managing a single account, or handling affairs during a three-month deployment are typical examples. Authority ends when the job is done or the window closes.
A durable power of attorney survives the principal’s incapacity. A standard, non-durable POA automatically lapses the moment the principal loses mental capacity, which is usually the exact moment an agent needs to step in. Durability language keeps the authority alive through cognitive decline, serious illness, or injury.
A springing power of attorney stays dormant until a triggering event, typically a physician’s certification that the principal cannot manage their own affairs. The principal keeps full control until that moment, but proving the trigger can create delays when speed matters.
Financial Rights
Financial authority is the most common reason a POA exists. When the document grants financial powers, the agent can deposit checks, pay bills, transfer funds between accounts, and handle investment portfolios. The agent can open or close bank accounts, deal with insurance companies, and manage retirement accounts on the principal’s behalf.
Expect friction at the start. Banks and brokerages want to see the original or a certified copy, and many route it through their legal department before granting access. The Consumer Financial Protection Bureau advises agents to contact financial institutions early and provide copies before any urgent need arises, rather than waiting for a crisis.
Bill-paying priority catches many agents off guard. When the principal’s funds are tight, the agent has to decide which obligations get paid first. The agent is never required to use personal money to cover the principal’s debts, but failing to pay critical bills when the principal has the funds to cover them can create liability.
Real Estate Rights
A power of attorney can authorize an agent to buy, sell, lease, or refinance property for the principal. The agent signs deeds, purchase agreements, and closing documents in the principal’s name. Title companies and county recorders will require a copy of the POA, and the document itself often needs to be recorded in the county where the property sits.
Real estate transactions through a POA get extra scrutiny. A fraudulently used POA can cloud title for years, so title companies are cautious. The agent should expect to provide not only the document but sometimes proof that the principal was competent at signing and that the POA has not been revoked. If the document is old, some title companies may refuse it and ask for a freshly executed version.
Healthcare Rights
A healthcare power of attorney (sometimes called a medical power of attorney or healthcare proxy) authorizes the agent to make treatment decisions when the principal cannot speak for themselves. That covers consenting to or refusing procedures, choosing doctors and care facilities, accessing medical records, and making end-of-life decisions.
Healthcare authority and financial authority almost always live in separate documents, and the principal can name different agents for each. The person best suited to manage a stock portfolio is not necessarily the right person to make decisions about life support.
A healthcare POA works alongside a living will (sometimes called an advance directive) but does something different. A living will states the principal’s specific wishes about treatments like ventilators, feeding tubes, or resuscitation. The healthcare POA names a person to make judgment calls the living will does not cover. A living will cannot anticipate every medical scenario, and an agent without any written guidance from the principal is making decisions in the dark.
One boundary worth being explicit about: a POA granting only financial authority gives the agent no right to make medical decisions, and a healthcare POA gives no right to touch the principal’s money.
Tax Rights and the IRS Form 2848 Wrinkle
A financial power of attorney gives the agent authority to prepare and file the principal’s tax returns, pay taxes owed, and correspond with taxing authorities. Dealing with the IRS directly requires an additional step. A general POA document alone does not authorize someone to represent the principal before the IRS. For that, the agent needs IRS Form 2848, which specifically authorizes a designated individual to act for the principal in federal tax matters.
Form 2848 has a notable restriction. The person authorized to represent the principal must be someone eligible to practice before the IRS: an attorney, CPA, or enrolled agent. A family member who holds a general POA but lacks professional credentials cannot use Form 2848 to represent the principal in an audit or dispute. That family member can still file returns and pay taxes using the general POA, but formal IRS proceedings require a qualified representative.
An agent can also be authorized to sign the principal’s tax return, but only in limited circumstances. Treasury regulations permit another person to sign an income tax return when the principal cannot do so because of disease, injury, or continuous absence from the United States for at least 60 days before the filing deadline.
Gifting Rights Are Tightly Restricted
Gifting is one of the most restricted powers an agent can hold, and this is where people get into serious trouble. Most courts will not read a gifting power into a general power of attorney. Unless the document explicitly grants authority to make gifts from the principal’s assets, the agent has no right to give away the principal’s money or property, even to family members the principal has always been generous with.
Even when gifting authority is expressly granted, the Uniform Power of Attorney Act (adopted in a majority of states) caps the agent’s gifts at the annual federal gift tax exclusion per recipient. That exclusion was $19,000 per recipient in 2025. The point is to let the agent continue the principal’s established gifting patterns for tax planning without enabling wholesale depletion of the estate.
An agent weighing a gift has to think about the principal’s known wishes, their history of giving, the total value of their assets, their foreseeable obligations, and whether the gift might jeopardize eligibility for benefits like Medicaid. An agent who makes large gifts that leave the principal unable to pay for their own care faces personal liability and potential criminal charges for financial exploitation.
What a Power of Attorney Cannot Do
Certain actions sit outside any power of attorney, no matter how broadly it is drafted. An agent cannot create, change, or revoke the principal’s will. Testamentary decisions require the principal’s own sound mind and personal intent and cannot be delegated. An agent also cannot vote in elections on the principal’s behalf.
An agent cannot act outside the boundaries the document sets. A POA granting only financial authority does not reach medical decisions. A POA limited to a single bank account does not let the agent sell the principal’s house. Any action beyond the stated scope is unauthorized, and third parties who discover the overreach can void the transaction.
Self-dealing is the brightest line. The agent cannot use the principal’s money for personal expenses, transfer the principal’s assets to themselves (unless the document specifically allows it), or steer the principal’s business to companies where the agent has a financial interest. The agent must keep the principal’s funds completely separate from their own. Commingling money, even temporarily and even with good intentions, is treated as a breach of duty.
The Fiduciary Duty That Governs Every Right
An agent under a power of attorney is a fiduciary, which the law treats as the highest standard of loyalty and care. Every decision must serve the principal’s interests, not the agent’s convenience or benefit. The obligation carries real legal consequences.
When an agent breaches fiduciary duty, the consequences range from civil lawsuits to criminal prosecution. A court can order the agent to return misused assets, pay damages covering the principal’s losses, and reimburse attorney fees. In cases involving theft or fraud, prosecutors can bring criminal charges. Courts can also permanently disqualify the agent from serving in any fiduciary role.
One common misconception is worth clearing up. An agent is not personally responsible for the principal’s existing debts. When signing documents on the principal’s behalf, the agent signs in a representative capacity, not a personal one. The proper format is the principal’s name followed by the agent’s name and “Attorney-in-Fact.” If the principal lacks sufficient assets to cover their obligations, the agent does not have to make up the difference. An agent who signs as a personal guarantor rather than in a representative capacity, however, can end up on the hook personally.
When the Authority Begins and When It Ends
A general or durable power of attorney typically takes effect the moment the principal signs it, assuming all legal formalities are met. A springing power of attorney stays inactive until its trigger event. If the trigger is the principal’s incapacity, that usually requires certification by one or two physicians, depending on what the document specifies. The gap between incapacity and certification can leave a window where no one has clear authority to act, which is why many planners prefer immediate-effect durable POAs over springing ones.
A power of attorney ends under any of these circumstances:
- Revocation by the principal. The principal can revoke a POA at any time while they still have mental capacity. Most states require written notice to the agent, and best practice is to have the revocation notarized. The principal should also notify any banks or third parties relying on the document.
- Death of the principal. All POA authority terminates automatically at death. The agent has no power to act afterward, even on tasks already in progress. Estate matters pass to the executor named in the will or an administrator appointed by the court.
- Court appointment of a guardian. If a court appoints a guardian or conservator, that individual can request termination of the agent’s authority, and the guardian’s powers supersede the agent’s.
- Completion or expiration. A limited POA ends when the specified task is finished or the stated expiration date arrives.
- The agent’s inability to serve. If the agent dies, becomes incapacitated, or resigns, the POA terminates unless the document names a successor.
In some states, divorce between the principal and agent automatically revokes the POA. A principal who named a spouse as agent should review the document immediately if the marriage ends.