Can someone holding power of attorney actually receive a settlement payment on your behalf?

Yes, someone holding a valid power of attorney can generally receive a settlement payment on the principal's behalf, provided the specific power of attorney document actually grants authority covering this kind of financial transaction — this isn't automatic just because someone holds power of attorney for some purpose, since the scope of authority varies considerably depending on how the specific document is drafted, and a power of attorney limited to healthcare decisions, for instance, wouldn't extend to receiving a financial settlement at all.

Getting this right matters for everyone involved: the agent acting under the power of attorney needs to confirm they actually have the specific authority being exercised, the party making the settlement payment needs to verify the power of attorney's validity and scope before releasing funds to someone other than the settlement's actual beneficiary, and the principal (the person the power of attorney was granted by) has a real interest in the arrangement being handled correctly and accountably, particularly if they're not in a position to monitor the transaction closely themselves.

What does a power of attorney actually need to say to cover receiving a settlement payment?

A power of attorney document's language determines its scope precisely, and this varies by jurisdiction and by how the specific document was drafted — some are broad, general powers of attorney covering most financial matters on the principal's behalf, while others are narrow, limited specifically to a particular purpose (managing a specific property, handling a specific transaction, or making healthcare decisions) that wouldn't extend to an unrelated financial matter like receiving a settlement. For a power of attorney to clearly authorize receiving a settlement payment, it should either be a broad, general financial power of attorney, or a specific power of attorney that explicitly references the authority to receive funds, negotiate, or settle claims on the principal's behalf.

This is worth checking carefully rather than assuming, since an agent attempting to receive a settlement payment under a power of attorney that doesn't actually cover this kind of transaction is acting outside their granted authority, which can create real problems for both the agent and anyone who releases funds to them based on a mistaken assumption that the document's scope was broader than it actually was.

What should the party actually making the settlement payment verify before releasing funds to an agent?

What happens if a power of attorney has been revoked or the principal has passed away, but the paying party isn't aware of this?

This is a genuinely significant risk worth taking seriously, since a power of attorney automatically terminates upon the principal's death in most jurisdictions (an agent's authority to act on someone's behalf doesn't survive that person's death — at that point, any authority to handle the deceased person's affairs generally shifts to whoever is managing their estate, such as an executor appointed through probate), and a power of attorney can also be revoked by the principal at any time while they're still alive and have capacity to do so. A paying party who releases settlement funds to an agent under a power of attorney that's actually been revoked or has terminated due to the principal's death, without being aware of this, can face real complications later if the payment is challenged by the actual beneficiary's estate or by the principal themselves if a revocation wasn't properly communicated.

This is one of the strongest reasons for a paying party to verify not just the document's language but its current, active status before releasing significant funds — asking directly whether the principal is still living and whether the power of attorney remains in effect, rather than simply relying on an older copy of the document without confirming nothing has changed since it was executed.

Does the agent receiving the settlement on the principal's behalf have any specific legal obligations regarding what happens to the funds afterward?

Yes, significantly — an agent acting under a power of attorney owes the principal a fiduciary duty, meaning they're legally obligated to act in the principal's best interest, manage any received funds responsibly and solely for the principal's benefit, and avoid any self-dealing or misuse of the authority granted to them. Receiving a settlement payment on the principal's behalf doesn't give the agent personal ownership of those funds — the agent is acting as a trusted representative, responsible for ensuring the funds are actually used for or delivered to the principal, not treated as the agent's own money to use freely.

This fiduciary obligation is a serious legal responsibility, and an agent who misuses settlement funds received under a power of attorney — using them for their own personal benefit rather than the principal's, for instance — can face real legal consequences, including being held personally liable for breach of fiduciary duty, separate from and in addition to whatever the underlying settlement dispute itself was about.

How should the agent actually document and account for the funds once received?

An agent receiving a settlement payment on a principal's behalf should maintain clear, careful records of exactly what was received, when, and what happened to the funds afterward — whether they were deposited into an account specifically held for the principal's benefit, used to pay the principal's specific expenses, or transferred directly to the principal if they're capable of managing the funds themselves. This record-keeping serves two important purposes: it protects the agent by demonstrating they handled the funds properly and in accordance with their fiduciary duty, and it protects the principal by creating an accountable trail showing exactly how their settlement proceeds were actually managed.

This is particularly important if other family members or interested parties might later question how the agent handled the funds, which unfortunately happens with some regularity in situations involving an aging or incapacitated principal — thorough documentation from the outset is the agent's best protection against a later dispute or accusation of mismanagement, and it's simply good practice regardless of whether any dispute ever actually arises.

How does this play out for an agent actually receiving a settlement on a principal's behalf?

Call her Marisol, who held a durable, broadly written financial power of attorney for her elderly father following a stroke that left him unable to manage his own affairs. A settlement from an earlier personal injury claim her father had filed before his stroke was finalized during this period, with the defendant's insurance company needing to confirm Marisol's authority before releasing a substantial payment to her rather than directly to her father.

The insurance company's claims department requested a copy of the power of attorney document, reviewed its specific language confirming it granted broad financial authority including the ability to settle and receive payment on claims, and separately confirmed with Marisol that her father was still living and that the document hadn't been revoked, all before releasing the funds. Marisol, understanding her fiduciary obligation clearly, deposited the settlement into an account held specifically for her father's benefit, kept detailed records of the transaction and any subsequent expenses paid from those funds on his behalf, and was able to account clearly and completely for the settlement's handling when her father's other adult children later asked, reasonably, how the funds had been managed during his incapacity. The careful verification on the insurance company's side and the careful documentation on Marisol's side together meant the transaction proceeded smoothly and remained defensible from every angle once questions understandably arose later.

What should a principal do proactively to make sure their own power of attorney is clear and won't create confusion later?

If you're setting up a power of attorney and want to ensure an agent can handle a future settlement or similar financial matter on your behalf without ambiguity, work with an attorney to draft language that explicitly and clearly covers this kind of authority, rather than relying on vague or general language that might later be disputed or questioned by a paying party being asked to release significant funds to your agent. Review and update the document periodically, particularly after any major life change, and make sure your chosen agent and any relevant family members understand where the document is kept and what it actually authorizes, so there's no confusion or delay if it's ever actually needed for a situation like receiving a settlement payment on your behalf.

Does the type of power of attorney — durable versus non-durable, or springing versus immediate — change any of this?

Yes, and the distinction matters considerably in practice. A "durable" power of attorney remains valid even after the principal becomes incapacitated, which is exactly the scenario where an agent receiving a settlement on the principal's behalf is most likely to be necessary — if the principal could manage the settlement themselves, there'd typically be less need for an agent to step in at all. A "non-durable" power of attorney, by contrast, automatically terminates the moment the principal becomes incapacitated, meaning it's generally unsuitable for exactly the situations where receiving a settlement on someone's behalf tends to arise, such as an elderly or injured principal unable to manage their own financial affairs.

A "springing" power of attorney is a further variation: rather than being effective immediately upon signing, it only takes effect once a specific triggering condition occurs, most commonly the principal's incapacity, as certified by a physician or in whatever manner the document specifies. A paying party dealing with an agent acting under a springing power of attorney should specifically confirm the triggering condition has actually occurred and been properly documented, since an agent attempting to exercise authority under a springing power of attorney before the triggering condition is met and verified is acting prematurely, regardless of how clearly the document's ultimate scope would cover the transaction once the condition is satisfied. This is a distinct verification step from confirming the document's general scope, and skipping it is a common source of confusion when a springing power of attorney is involved in a time-sensitive settlement payment.

What if the settlement involves a structured payout over time rather than a single lump sum?

A power of attorney's authority to receive settlement funds generally extends to a structured settlement's periodic payments just as it would to a lump sum, provided the document's scope is broad enough to cover the underlying transaction, but a structured payout introduces its own additional wrinkle worth planning for: the agent's authority needs to remain valid for the full duration over which payments are expected, which could span years or even decades for some structured settlements. If the power of attorney is set to expire on a specific date, is tied to a condition that might resolve before the payout period ends, or depends on the agent's own continued availability and willingness to serve, the principal and anyone helping arrange the structured settlement should think specifically about what happens to future payments if the power of attorney lapses, is revoked, or the named agent becomes unable to continue serving partway through the payout schedule.

Building in a successor agent provision, or confirming the power of attorney doesn't have a built-in expiration that could outlast the structured payout, is a sensible step in this specific scenario, since restructuring how future periodic payments are received mid-stream, after a power of attorney issue arises, tends to be considerably more complicated than addressing this upfront while the settlement and its payment structure are still being arranged.

What's the practical takeaway for anyone involved in this kind of transaction, whether as the agent, the paying party, or the principal?

As the agent, confirm your specific power of attorney document actually covers this transaction before acting, and understand clearly that you're receiving funds as a fiduciary for the principal's benefit, not as your own money, with careful documentation protecting you if your handling is ever questioned. As the paying party, verify both the document's language and its current active status — confirming it hasn't been revoked and that the principal is still living — before releasing significant funds to anyone other than the settlement's actual beneficiary. As the principal, work with an attorney to draft clear, explicit language covering the kinds of transactions you want your agent to be able to handle, removing ambiguity that could otherwise delay or complicate exactly the kind of important financial transaction a power of attorney is meant to make possible in your absence or incapacity.