The person you appoint may be a family member, a relative, or a friend whom you are confident enough to make the best choices for you, especially when it comes to decisions regarding your health and finances. If you designate someone whom you trust as your agent, you can have peace of mind that the person can make decisions for you according to your best interest. Collecting benefits from health and other insurances on behalf of the principal. Setting up or amending trust funds. Revoking the power of attorney. Laws covering the power of attorney vary in each state. For example, if the attorney-in-fact is the spouse and they get a divorce, the power of attorney is terminated. Why Do You Need to Prepare a Power of Attorney? A power of attorney (POA) is a very essential legal document. However, before you can fully understand its importance, it is best to know its purpose first. In general, the goal for creating a POA is to protect your interests and manage your estates when you have reached a point when you can no longer do them on your own. Because it can have legal consequences, the transfer of power or the authorizing is written as a legal contract, which is shown to people before the attorney-in-fact can proceed with his dealings on behalf of the client or the principal. Often, when the attorney-in-fact is being paid, a separate contract is drafted for the payment and is not shown to other people. Would the person be willing to spend time to handle your affairs? We are all busy. Perhaps, the person you are appointing as your attorney-in-fact could be busier than you are. It is important that the person be able to spend much time to handle your affairs and work on your behalf. If not, you would be in trouble. Thus, this type of powers of attorney is an enduring one since it remains in effect even if the principal is mentally incapable of making decisions for himself or herself. Durable powers of attorney are classified into two general types: health care and financial. As the name suggests, health care durable powers of attorney authorize a person, who is called an agent or an attorney-in-fact, to make all the needed choices regarding health care and hospitalization on behalf of the principal.