It is defined as the full legal authority given to another individual to be responsible for all your finance-related affairs, including filing income tax returns and paying the bills. The agent can even sign documents on behalf of the principal. This agent is allowed to handle all the principal s finances except the assets owned by the revocable living trust. The court may also rule the document to be invalid, especially if the principal is proven to be incompetent when the document was signed. The principal could also revoke it, as long as he is mentally sound. The power of attorney could also be terminated if the attorney-in-fact becomes incompetent, unavailable or dies. Power of Attorney: A Brief Overview The power of attorney may seem like a legal jargon that only those who are well-versed in the technicalities of the law could understand. That is usually the case if you have encountered this term for the first time. However, nothing is complex or incomprehensible about it. The person entrusted with this power/ authority is called the agent or attorney-in-fact while the person who signed the document is the principal. The power of attorney is usually used to handle financial or business affairs when the principal is not available or incapacitated. There are power of attorney documents which allow the agent to continue being authority even the principal is no longer mentally capable. A judge will choose a person who will serve as your legal representative, and this agent may be someone who you do not fully trust. If you want to have a say on who will take care of your affairs when you become incapable of doing so, then it makes perfect sense to create a power-of-attorney document. However, take note that the healthcare power of attorney is not the same as a living will, which is a document to express your personal wishes in case you would need life-sustaining procedures. The durable power of attorney could be a general, healthcare or special power of attorney containing specific durability provisions.