A power of attorney is a type of legal document in which you declare that you are assigning another person (a close relative or a trusted friend) the authority to make certain decisions on your behalf while you are temporarily unable. The person to whom you give these rights to is called an "agent". You, as the designator, are called the "principal." The agent is a "fiduciary", which means that he or she must perform any decisions with your best interests in mind and completely in good faith. Good faith simply means that something is being done without the intent to deceive.
If a person were going to be hospitalized for a common surgery, or was going to be physically unable to perform certain financial or legal obligations, an agent can be selected for a Limited Power of Attorney. This person could perform such tasks as banking affairs, paying bills or other tasks as assigned by you. As long as you, as the principal, are capable of making decisions with a sound mind, the agent must follow your directions. Once you are able to perform the required tasks on your own, the power and privileges are revoked. In other instances, there should be a time limit set for these powers, with an indefinite time frame or permanency clause avoided. This document is also null and void if you become permanently incapacitated or were to die.
The second type of authority is a General Power of Attorney. This document gives the agent the ability to perform any tasks that you yourself can do including, but not limited to decisions and follow through of banking transactions, opening safety deposit boxes, completing transactions involving securities, stocks and/or bonds, the buying and selling of personal property, purchasing life insurance, settling claims, entering into legally binding contracts, controlling real estate (which would include, selling, buying and/or managing), filing tax returns and decisions related to government benefits. The person acting as your agent should be a trusted individual. Again, the agent is someone who would act with only your best interests in mind.
A Health Care Power of Attorney designates an agent to make health care decisions for you if you are unconscious, mentally incompetent, or otherwise unable to make such decisions. It is important to understand that there is a difference between this document and a Living Will. A Living Will only provides directive in the event that life sustaining decisions are in question. Your agent would be entitled to make decisions including but not limited to surgeries, doctors, hospitals, after care and the amount of life saving efforts performed on your behalf. Again, the agent should be someone you have absolute trust in. With these documents and the power bestowed on the agent, it is imperative that an understanding be in place regarding your wishes before the document is signed. In most states, this person cannot be a health care provider or a hospital/care facility employee, even if they are related.