What is a General Durable Power of Attorney?
A general durable power of attorney is a document everyone age 18 and older should have. Wills and trusts are usually the first things that come to mind as an individual considers their estate plan, but the importance of having a thorough and detailed power attorney document should not be overlooked. A downloaded form on the internet should not substitute for one prepared by an estate planning attorney that can prepare one to squarely address your circumstances and needs.
What does a General Durable Power of Attorney do?
We cannot predict when a difficult event or catastrophic injury may occur. A general durable power of attorney grants a named individual (called the “attorney-in-fact” or “agent”) the authority to act on your behalf with respect to whatever matters are designated within the document. This requires the document to be clear, concise and carefully drafted to meet your needs. In short, a general durable power of attorney is about your ability to have your property, legal affairs, business dealings and financial matters handled effectively, conveniently and quickly in the event of difficult or unforeseen personal circumstances. Without a power of attorney, if you become mentally incapacitated, someone would have to seek the appropriate authority to act through a court process. In addition to the obvious timeliness and inconvenience of not having a power of attorney, the door would also remain open to disputes regarding your capacity and ability to make your own decisions. In the event of any question as to your whereabouts, further complications would also be anticipated.
What is a “Springing” Power of Attorney?
There are two fundamentally different types of power of attorney documents: (1) a power of attorney that grants the attorney-in-fact immediate power to act and (2) a “springing” power of attorney that grants authority only if you are shown to be mentally incompetent (unable to manage your own affairs)–which would typically be accomplished by a signed certification from two physicians. Although at first blush, most people would think the springing power of attorney is the better choice, under most circumstances, the immediate power of attorney is recommended.
What Powers should I give my Attorney-In-Fact?
A power of attorney can be prepared to be as narrow or as broad as you like. For example, an individual can sign a power of attorney granting the attorney-in-fact authority only to sell a car. Conversely, one can prepare a power of attorney that it is very broad, granting the named attorney-in-fact a wide-range of authority to handle all financial and legal matters. The possibilities of the breadth and scope of powers given in this instrument (whether narrow or broad) do have some limitations. The power to vote in a public election, draft a will, create joint accounts, and the power to marry the incapacitated person cannot be exercised by the attorney-in-fact. In short, a power of attorney should be prepared to reflect and effectuate your wishes within the parameters you want in place.
What does “durable” mean?
The term “durable” power of attorney means that it continues to be effective and binding even after the person signing it has become mentally incapacitated. There are some instances in which someone might prepare a non-durable power of attorney (which would terminate when the person giving the authority loses mental competence) but in the context of estate planning, it is almost always preferable to have a “durable” power of attorney.
How Do I Avoid Financial Abuse?
A properly prepared and implemented power of attorney should consider and reduce potential risks to the individual and his or her family. Of course, much thought should be given to who should be appointed as your attorney-in-fact. Characteristics such as trustworthiness, honesty, aptitude, experience and loyalty are important to consider. However, the manner in which a power of attorney document is prepared can also significantly reduce potential risks. For example, it may be wise to exclude certain more “sensitive” powers from a power of attorney (such as the ability to revise estate planning or beneficiary designations). Additional precautionary steps can be taken by naming co-agents or requiring notice to an additional individual.