When you grant power of attorney, you give another person or organization the right to make legally enforceable decisions for you. The powers you grant are as broad or as limited as you desire, but are also limited by the laws of the state in which you live. These laws may or may not limit the person you give power of attorney to in his ability to conduct specific transactions, so talk to a lawyer in your state for legal advice about the rules in your area.
The person or organization to whom you grant power of attorney is known as your agent or your attorney-in-fact. You have the right to grant your agent any legal abilities you possess, but some powers must be specifically accounted for in some states. For example, the state of Colorado requires that powers of attorney intended to allow the agent the right to give himself gifts on behalf of the principal specifically state this in the power of attorney document. These specifically enumerated powers are often referred to as "hot powers," and differ between states.
Any agent who transfers real estate interests on behalf of a principal must generally register their power of attorney with the appropriate government agency. For example, if your attorney-in-fact wants to transfer interests in real property on your behalf in the state of Ohio, the agent must first file the power of attorney with the county register in the county where the property is registered. This must happen before any recording or transfer of deed.
An attorney-in-fact is a fiduciary, a person who has a heightened legal obligation to the the principal imposed under the law. A fiduciary is legally obligated to ensure that the principal's best interests are looked after. This means, for example, that an attorney-in-fact cannot deed property to himself unless it is in the principal's best interests. A fiduciary cannot receive personal profit from his transactions on behalf of the principal unless specifically allows him to do so, and cannot merely gift himself property to satisfy his desires.
An attorney-in-fact's powers terminate as soon as the principal dies or when the powers are otherwise terminated. A non-durable power of attorney terminates as soon as the principal loses the ability to make decisions, while a durable power of attorney continues even if this happens. Also, an agent's powers can continue even after the principal's death. As long as the agent is not aware that the principal is dead, he can continue to act on the principal's behalf.