Durable Power of Attorney

A Power of Attorney (POA) is an estate planning document that authorizes another party to act on your behalf for specific purposes and for a specified period of time. The person who gives the POA is called the Principal, and the person who receives the POA is called the Agent.

A POA can be helpful when you are unable to take care of your own affairs, and you need to authorize someone to take care of them for you. People most often create POAs to authorize someone to handle their affairs under the following circumstances:

  • When it is inconvenient or impossible for them to handle their own affairs. For example, when they are away on vacation or other business; and/or
  • When they are experiencing limited mobility due to injury or illness.

A General POA is one that gives your agent a broad range of powers to transact financial matters, manage banking, investments, and retirement accounts, and sign documents on your behalf. You can make a General POA as broad and general, or as limited and specific as you want.

For example, you can use a General POA just to authorize someone to sell your home, because you will be out of town when the sale is set to occur. In other cases, you may want to give a General POA that is as broad as possible, so that your agent can handle all of your affairs if need be.

What is a Durable Power of Attorney?

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.

Types of Durable Powers of Attorney

There are essentially two types of Durable POAs:

  1. Springing Durable POA; and
  2. 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.

What Powers Are Granted Under A Durable POA?

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.

Things to Consider When Creating a Durable POA

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:

  1. Need - Only give powers as needed. Avoid giving powers for things that you can do yourself;
  2. Scope - Limit the scope of the powers you give by only giving powers for a limited purpose and a limited amount of time; and
  3. 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.

Contact an Experienced Estate Planning Attorney for More Information Regarding a Durable Power of Attorney

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.