What is a Durable (Financial) Power of Attorney?
A Durable Power of Attorney (DPOA) is a legal document that grants one person, known as the “agent” or “attorney-in-fact,” the authority to make financial and legal decisions on behalf of another person, known as the “principal.” What sets a DPOA apart from a regular Power of Attorney is that it remains valid even if the principal becomes mentally incapacitated or unable to make decisions due to illness, injury, or other circumstances.
Here are some key points to understand about a Durable Power of Attorney:
- Durability: The “durable” aspect of this type of power of attorney means that it remains in effect even if the principal becomes incapacitated. In contrast, a standard (non-durable) power of attorney typically becomes void if the principal loses mental capacity.
- Scope of Authority: The DPOA can grant a wide range of powers to the agent, such as managing financial accounts, paying bills, handling investments, selling or managing real estate, making legal decisions, and more. The specific powers and limitations can be tailored to the principal’s preferences.
- Revocability: A DPOA is generally revocable by the principal as long as they are mentally competent. If the principal wishes to revoke or change the DPOA, they can typically do so by executing a new DPOA document or notifying the agent in writing.
- Agent’s Responsibilities: The agent has a fiduciary duty to act in the best interests of the principal and to follow any instructions or limitations outlined in the DPOA document. Agents should keep detailed records of all financial transactions and decisions made on behalf of the principal.
- Multiple Agents: In some cases, a DPOA may name multiple agents, allowing them to act jointly or independently. This can provide added flexibility and oversight, but it’s essential to define how decisions will be made if multiple agents are appointed.
- Healthcare Decisions: While a DPOA primarily addresses financial and legal matters, individuals often create a separate Health Care Power of Attorney (HCPOA) or advance healthcare directives to specify their medical treatment preferences and appoint someone to make healthcare decisions on their behalf if they become incapacitated.
A Durable Power of Attorney can be a crucial component of an individual’s estate planning and advance care planning. It helps ensure that someone trustworthy is empowered to manage their financial and legal affairs if they are unable to do so, reducing the need for court-appointed guardianship or conservatorship in cases of incapacity. It is advisable to consult with an attorney or use state-specific forms to create a legally valid Durable Power of Attorney tailored to your specific needs and circumstances. Call today to speak with an experienced attorney at the Law Offices of Austin Vandeveer. We look forward to working with you.