It is a document that summarizes and proves your agreement to give your appointed person (the agent or attorney-in-fact) the authority to act on your behalf. There are four main types of power of attorney that you could choose from. These types may be functional and useful depending on your need and requirements. In fact, you could appoint just about anyone (in legal age) as your attorney-in-fact. The appointment and authorization should be clearly stated in the legal document (a power of attorney is actually a legally effective document). How is the power of attorney created? You need to completely fill out a specific power of attorney form. In contrast, the second type is limited to only a certain kind of financial responsibility. 3. Be wary of the risks involved in granting another person the power to manage your finances. Remember, by creating a POA, you authorize your agent to use your name in carrying out his or her tasks such as preparing and filing tax returns, borrowing money from the bank, and collecting your social security benefits. You may also consider using separate powers of attorney to designate another person who will be responsible for your health care and finances. For example, a financial power of attorney allows the agent to perform certain tasks such as handling your properties or paying your bills when you cannot do it, such as when you are out of the country or hospitalized for a brief period. It refers to a legal document that allows an individual or a financial institution such as a bank to manage your finances whether you are capable or not of doing it on your own. The following are the essential considerations that you need to think about when creating a financial power-of-attorney document: 1. A power of attorney can also be given to people, authorizing them to refuse or allow medical care to the principal if they become incapable of making decisions for themselves. This also includes making the decision to pull the plug in cases when only a machine is keeping the principal alive. Some people are also given the power of attorney to take care of a principal s financial portfolio.