Which document is essential for establishing powers granted to a fiduciary?

The power of attorney document is essential for establishing the specific powers granted to a fiduciary because this legal instrument explicitly designates an individual or entity (the attorney-in-fact) to act on behalf of another person (the principal) in legal or financial matters. This document delineates the scope of authority, which may include managing the principal's finances, making healthcare decisions, or handling various transactions.

While a will and a trust agreement are crucial for outlining how a person's assets will be managed and distributed after their death, they do not specifically grant powers to a fiduciary to act on behalf of the principal during their lifetime. An investment policy statement serves as a guideline for managing investment assets according to the principal's objectives but does not serve to explicitly delegate powers to an individual or entity. Thus, the power of attorney is the primary document that directly conveys the authority and responsibilities a fiduciary needs to act on behalf of someone else.