General POAs have one notable limitation, they expire the moment you become mentally incapacitated, just when you need a POA the most. So, to solve this problem, you can create what is called a Durable Power of Attorney.
A Durable Power of Attorney (Durable POA) has all of the same characteristics as a General POA. However, a Durable POA also contains language that allows it to remain in effect even after you become mentally incapacitated. Thus, it is "durable."
This “durability” means that, along with using a Durable POA to designate an agent to handle your financial affairs, it can also be used to designate an agent to make healthcare decisions on your behalf during periods of incapacity. When these powers are granted separately, they are often referred to as a Durable POA for Finances and a Durable POA for Healthcare.
A Durable POA for Health Care is most often coupled with another estate planning document called a Living Will. This document permits you to express, in advance, your preferences for cardiopulmonary resuscitation (CPR), mechanical ventilation, feeding tubes, and other end-of-life medical options.
There are essentially two types of Durable POAs:
- Springing Durable POA; and
- Non-Springing Durable POA
A springing Durable POA is one that you can sign today but does not spring into effect until after you become incapacitated or unable to communicate and act on your own. A non-springing Durable POA, on the other hand, comes into effect the moment you sign it.
Non-springing General Durable POAs can give agents very broad powers on an indefinite basis. Because of this, some banks and institutions will not honor them, for fear of fraud or misuse. Therefore, anyone executing a Non-springing General Durable POA should exercise caution, and first look to execute a springing version.
A Durable POA can be very helpful when you need to ensure that your financial affairs and medical well-being are looked after at times when you are incapable of doing so yourself.
With a Durable POA, you can give your agent the authority to sign almost any document that you could otherwise sign yourself. One exception, however, would be your Will.
A Will must be signed by its creator. Therefore, a Durable POA will not authorize your agent to make a Will for you, or to make any changes to your existing Will.
It is also important to note that, giving someone a Durable POA does not take away from your ability to continue managing your own affairs, so long as you are able. Nor does a Durable POA give your agent the right to tell you what you can or cannot do, or to make decisions that you disagree with.
Moreover, your Durable POA can be set to expire on a specified date and revoked at any time, as long as you are able to understand what you are signing. Otherwise, your Durable POA will terminate upon your death.
While a Durable POA can be very useful, authorizing someone else to act on your behalf can be risky, especially since you will be legally responsible for any actions your agent takes in your name. So, when creating a Durable POA, it is important that you take steps to minimize the risk of intentional or unintentional misuse.
Before giving a Durable POA to anyone, always consider the following three factors:
- Need - Only give powers as needed. Avoid giving powers for things that you can do yourself;
- Scope - Limit the scope of the powers you give by only giving powers for a limited purpose and a limited amount of time; and
- Agent - Only give a Durable POA to an agent you completely trust to do the things for which it was given. Immediately revoke a Durable POA from anyone you do not trust anymore.
Doing these things will reduce your risk of being obliged to satisfy debts or obligations that you did not authorize and cannot afford.
In matters involving Powers of Attorney, it is always best to consult with a qualified estate planning attorney for advice. For more information regarding Durable Powers of Attorney, or for help with creating one, contact an experienced estate planning attorney in the state where you live.