Powers of attorney and appointment are two distinct powers that allow one person to act on behalf of another, in order to manage certain important decisions related to property, health care, and more.

Power of Appointment

A power of appointment gives a person the ability to choose recipients of property. Often, a person making a will (a "testator") includes a power of appointment in his or her will to give another person the power to fairly divide property after the testator's death. The testator may choose to do this because he or she does not know how best to divide the property, or because he or she is not certain what items will make up the estate at his or her death. Like a trust, the person with power of appointment takes action on property interests, but unlike a trust, that person does not manage the property. All he or she can do is choose who will receive property, and grant those people ownership rights.

Example: Mr. Johnson's will gives "the contents of my house to my children, my eldest son to choose who receives which item." The eldest son has a power of appointment to choose who receives ownership of each individual item.

A power of appointment can be general or special. A general power allows the person holding the power to choose himself or herself to receive property, as in the example above. A special power means the holder can only choose among a certain group of people, usually not including the holder. If the person holding the power of appointment does not exercise his or her power, the property may go to others specified in the will or by law as "takers in default of appointment."

Power of Attorney

A power of attorney is a document granting an attorney-in-fact the power to make certain decisions on behalf of the person giving that power (the principal). The attorney-in-fact may be any competent adult, not necessarily an attorney-at-law. The attorney-in-fact acts as the principal's agent, and the power of attorney document authorizes his or her actions over whatever activities the principal specifies. Most commonly, a power of attorney grants authority to manage the principal's financial dealings. The principal may remove the power by revoking it, or by setting a time limit on the power. Otherwise, the power ends when the principal dies or, in some cases, when the principal becomes incapacitated.

Example: Natalie must go out of town on business, but she is in the process of selling her house, and expects she may receive a bid during her absence. She grants a power of attorney to her brother only for the purpose of reviewing bids and acting for her to accept the first one that meets Natalie's criteria. She puts a time limit on the power so it will end on the day she returns from her trip.

Durable Power of Attorney

A durable power of attorney either becomes or remains effective when the principal becomes incapacitated.  A durable power of attorney for healthcare decisions grants the attorney-in-fact the power to make decisions about the principal's health care whenever he or she is unable to communicate on the subject.  A durable power of attorney also can maintain the attorney-in-fact's power to manage all or some of the principal's financial relationships should the principal become incapacitated.