Durable Power Of Attorney Explained

Power of attorney is a concept that many individuals today should know about. Investopedia mentions that power of attorney is a legal document that allows one person to act as the agent for another person. However, power of attorney typically only caters for situations where the person the agent is working for is incapacitated or unable to function. When the person can once again decide, the right to do so reverts to them. A durable power of attorney makes the change permanent. In this article, we’ll look at how durable power of attorney can be created and what use it has.

Comparing Power of Attorney and Durable Power of Attorney

When we mention power of attorney, it could refer to several different types, as the American Bar Association notes. General power of attorney becomes valid from the moment that an individual becomes incapacitated until that person recovers. If you recover and you still want someone else to maintain control of making your decisions, you can insert a durable clause into your power of attorney document. A durable power of attorney extends their decision-making responsibilities beyond the time when the principal became incapacitated. Once the clause is included, the power of attorney will persist.

There are situations where a court may end a durable power of attorney, however. If the principal (the person who is having the decisions made for them) got divorced, but the estate documents hadn’t been updated as yet, the court may see fit to end the durable power of attorney. Some states have an implicit durable status. They treat all power of attorney documents as durable unless stated otherwise. In such a case, your lawyer should be able to ensure that you include a clause that lets the state know that your power of attorney should end at a particular date or event (such as recovering completely from an illness that rendered you unable to make your own decisions.

What Decisions Can a General Power of Attorney Make?

Suppose the power of attorney you grant isn’t specific in the decisions that it can make. In that case, a general power of attorney has the authority to make almost any decision in your stead. A power of attorney can decide on financial, health, and even legal and business decisions for you. It is important to note that general power of attorney can be as broad or as limited as your lawyer, and you decide to make it. General power of attorney might encompass other types of power of attorney, including:

  • Healthcare Power of Attorney: An individual who is incapacitated and cannot make their own decisions regarding their healthcare might opt to have a healthcare power of attorney to do so for them. While many people think that a healthcare power of attorney is the same as a living will, there are many distinct differences. The most notable difference between a living will and a healthcare power of attorney is that the living will deals with end-of-life wishes. In contrast, the healthcare power of attorney can deal with non-life-threatening healthcare decisions.
  • Financial Power of Attorney: If the principal requires someone to make financial decisions on their behalf, a financial power of attorney allows them to grant that right. The decisions that a financial power of attorney may make include paying bills, loans, signing contracts, and closing business deals.

These sound like sweeping powers that can make a lot of difference to a person’s life. If you don’t want to transfer the entire spectrum of rights to someone via a power of attorney document, your lawyer can create a specialized agreement known as a special power of attorney. These allow you to limit the decision-making power that any one individual can make on your behalf and is very useful if you want to distribute power among the individuals within your family if you cannot make decisions yourself.

What Can an Agent Do With a Durable Power of Attorney

If you have a special power of attorney, the limited scope that the agent may act in is defined in the document. However, with a durable general power of attorney, there’s no limit to the agent’s capabilities. Lawyers who have drafted the durable power of attorney documents can explain in detail if an agent finds themselves unsure about the extent of their control. Even so, there are a few things that agents are not allowed to do under any circumstances.

An agent may not sign any document that states that the principal knows specific facts. If, for example, the principal was a witness to a car accident, then the agent is not able to state or sign a witness statement claiming that the principal agrees with a particular version of events. An agent may also not cast a vote for a principal in any elections. They cannot create a supplement to a will or revoke a will in the principal’s name, either. If the principal was assigned as the guardian or conservator over another person, the agent does not take over those responsibilities. The agent isn’t allowed to perform any services under contract for the principal, either.

Under the law, the agent retains a certain standard of care when they are put in control of the principal’s assets. They have a fiduciary relationship, meaning that it is based on trust. Therefore, the agent must act in the principal’s best interests regardless of the service they are undertaking on the principal’s behalf. If the agent violates this trust at any time, they may be liable to pay a fine or be sent to jail. When the agent authorizes an act that the power of attorney defined legally, they cannot be held personally responsible for the action afterward.

A Useful Way to Deal with Certain Situations

Power of attorney is a useful way to ensure that if you’re unable to do something, someone else can get it done for you legally. A durable power of attorney helps to deal with issues that may arise if you intend to retire to preserve your health or want someone making your healthcare decisions because you’re not able to in the future. It’s not something you should decide on lightly, since this person will have power over every decision you make once you sign the document.