If you become ill or injured and you can't take care of your own finances, someone else must step in to help. Enter a handy document called a power of attorney. A POA is a simple document that grants specific powers to someone you trust—called an "agent" or "attorney-in-fact"—that allows this person to deposit your checks at your bank, file your taxes, or even sell or mortgage your home on your behalf. Without this important document, your loved ones will have to go to court to get authority over your financial affairs if it ever becomes necessary.
You can make several different types of POAs in California. In particular, many estate plans include two POAs that are effective even if you become incapacitated:
Both of these POAs are what are known as "durable" POAs, which means that they retain their effectiveness even after you're incapacitated. It's a good idea for most people to create these two documents, as they help plan for the unexpected.
To learn about other types of POAs, including non-durable (limited) and springing POAs, see What Is a Power of Attorney. Below, learn how to create a durable financial POA that is valid in California.
For your POA to be valid in California, it must meet certain requirements.
California requires that the person making a power of attorney have a certain mental capacity, called the "capacity to contract." Notably, this requirement is more stringent than the capacity to make a will or trust. If you're helping someone create a POA, at a minimum you'll want to make sure that they are able to:
(Cal. Civ. Code § 39(b).) If you're helping someone create a POA and you're not sure if they have the necessary mental capacity, consult a lawyer.
To make a POA in California, you must sign your POA in the presence of a notary public if you used a statutory form (see below). If you didn't use a statutory form, you can either have the document notarized or sign it in the presence of two witnesses, or both. (Cal. Prob. Code §§ 4121(c) and 4122.) It's best to—at the very least—have your POA notarized, since many financial institutions will require it before they allow your agent to act under the POA. If you want your agent to conduct real estate transactions, your county land records office will require notarization as well.
A handful of states, including California, requires the agent to sign and date the POA as well. However, the agent need not do this until it becomes time to use the POA. (Cal. Prob. Code § 4128.)
California offers a statutory form (a form drafted by the state legislature) with blanks that you can fill out to create your POA. For a more user-friendly experience, try Nolo's WillMaker, which guides you through a series of questions to arrive at a POA that meets your specific aims and is valid in your state. (You can also use WillMaker to make your will or living trust.) Or you can hire a California lawyer to create a POA for you, though the cost will be higher. Many lawyers will also include durable POAs as part of a more comprehensive estate plan alongside a will or living trust.
Whatever method you choose, the process of making the POA will include granting your agent all powers or selecting (and initialing), from a list, the specific powers you want your agent to have. For example, you might choose to grant your agent power over:
An optional section in the California POA also allows you to further limit or extend your agent's powers if the standard list does not fit your goals.
Note that if you use California's statutory form, the power of attorney is durable (meaning that it remains effective after your incapacitation). In the statutory form, you'll find this language: "This power of attorney will continue to be effective even though I become incapacitated." If you make a non-statutory POA, the power of attorney is not durable unless it explicitly says so.
As mentioned above, you can't simply sign the document and call it a day. In California, you must have the POA notarized.
In some cases, you can choose to have it witnessed by two people instead, though it's best to at the very least have your POA notarized. (See above.) If you do choose witnesses, they must be over 18 and they can't be named as agents in your POA.
Once you have completed the POA, store the original in a safe place that your loved ones can easily access, and let them know where to find it. (It won't do much good locked away in a safe that no one can get into.) If you become incapacitated, your agent might need the original POA to act on your behalf.
You should also give a copy of the power of attorney to your agent so that your agent is familiar with the contents of the document and can use it when needed.
If you initialed "real property transactions" as one of the powers you granted to your agent, you should also file a copy of your POA in land records office (called the Office of the County Clerk-Recorder in California) of any county where you own real estate. This will allow the land records office to recognize your agent's authority if your agent ever needs to sell, mortgage, or transfer real estate for you.
You can also give copies of your durable financial POA to banks or other institutions that your agent might need to deal with in the future. This step might eliminate some hassles for your agent if your agent ever needs to use the POA. Banks can sometimes be finicky about accepting POAs; see Can Banks Refuse a Power of Attorney? for more details.
Legally speaking, you can name any competent adult to serve as your agent. But you'll want to take into account certain practical considerations, such as the person's trustworthiness and geographical location. For more on choosing agents, see What Is a Power of Attorney.
California allows you to appoint co-agents who are authorized to act at the same time, but it's usually advisable to stick to just one agent to minimize potential conflicts. However, naming a "successor" agent—an alternate who will become your agent if your first choice is unavailable for any reason—is always a good idea, as it creates a backup plan.
Your POA should say when it takes effect. If you used California's statutory POA form, it will say, "UNLESS YOU DIRECT OTHERWISE ABOVE, THIS POWER OF ATTORNEY IS EFFECTIVE IMMEDIATELY AND WILL CONTINUE UNTIL IT IS REVOKED." The POA takes effect as soon as you've signed and notarized it.
It's possible to create a condition that must be satisfied before the POA becomes effective—such as a doctor declaring that you are incapacitated—but there are many reasons why this type of "springing" power of attorney is not usually advised.
Any power of attorney automatically ends at your death. It also ends if:
Additionally, in California, if your spouse is named as your agent in your POA, that designation automatically ends once either of you gets divorced. To be clear, your ex-spouse's authority to act as your agent ends, but your POA is still intact. So if you named a successor agent, that person would become your agent.
You usually don't need a lawyer to prepare a durable power of attorney for finances because it's a simple and straightforward document. As discussed above, California's state government has even created a statutory form POA for people to complete on their own by filling in the blanks. For more guidance and explanation, you can also try Nolo's bestselling WillMaker.
For more on California estate planning issues, see our section on California Estate Planning.