While every state specifically permits durable powers of attorney for financial purposes, the rules for health care powers of attorney vary considerably. Most jurisdictions recognize the validity of such powers, and even states without specific authority may permit health care powers in practice. A properly drafted power of attorney may preclude the need for court action, and may save substantial legal expense and invasion of privacy in the event of incapacity. On the other hand, in most jurisdictions powers of attorney are not reviewed or regulated by any agency. Consequently, the potential for abuse by agents under powers of attorney is great.
Most states also permit substantial latitude to include or exclude specific authority.
Despite general and sweeping language in many powers of attorney, most states do not require third persons to honor the power. Problems are especially frequent when trying to deal with real estate transactions, tax returns and government bonds. Powers of attorney are more likely to be honored if they specifically refer to certain assets or types of transactions. When acting under a power of attorney, the agent will ordinarily sign documents by referring to the power. The authority of the agent is limited to those items listed in the power of attorney.