Why Everyone Should Consider a Durable Power of Attorney
Imagine this situation. An unexpected accident or a serious illness can make it difficult for you to make important decisions.
Getting older can also lead to this challenge. Who would take care of your finances? Who would speak with your doctors and ensure your wishes are honored?
Without the right legal framework, your loved ones may face confusion and delays. They could even end up in court trying to help you. That’s where a durable power of attorney (DPOA) comes into play — a key component of any solid estate or life planning strategy.
What Is a Durable Power of Attorney?
A durable power of attorney is a legal document. It allows someone you trust to act for you if you cannot. The person you choose, often called your agent or attorney-in-fact, can have wide or limited powers based on your needs.
The “durable” part is critical. Unlike a standard power of attorney, which becomes invalid if you lose mental capacity, a DPOA remains in effect even after you’re no longer able to make decisions for yourself. This ensures continuity when you’re at your most vulnerable.
These documents are governed by state law, so the rules about how to create and enforce them can vary. If you own property or have financial interests in more than one state, it is smart to talk to a lawyer. They can help ensure your DPOA is accepted in all areas.
Two Main Types of Durable Power of Attorney
There are two distinct forms of DPOA, and both play important roles:
Financial Durable Power of Attorney: This lets your agent manage your money. They can pay bills, access accounts, handle investments, file taxes, and conduct real estate transactions.
Medical Durable Power of Attorney: This is also called a health care proxy. It allows someone to make medical decisions for you if you cannot do it yourself. This includes choices about treatments, surgeries, medications, and long-term care options.
While you can create just one or the other, having both provides a more complete safety net. In fact, many states require separate documents for health and financial matters. Together, they offer a comprehensive solution for managing your affairs during a time of crisis.
Other Forms of Power of Attorney
There are a few related versions of power of attorney worth mentioning:
Nondurable Power of Attorney: Valid only while you have full mental capacity. It becomes void once you’re incapacitated.
Springing Power of Attorney: This kicks in only when a specific condition occurs — such as a doctor certifying you’re no longer capable of making decisions. Some states have phased out this terminology, but the functionality still exists in customizable documents.
The key takeaway is that power of attorney documents are highly flexible and can be tailored to suit your unique circumstances. A qualified estate planning attorney can help you navigate the options and craft documents that reflect your intentions.
How to Set Up a Durable Power of Attorney
Setting up a DPOA is relatively straightforward, but it’s not something to take lightly. Here’s a step-by-step guide:
Locate Your State’s Forms: Many states provide free templates online, or you can obtain them through banks, hospitals, or legal aid websites. Be sure the form aligns with your state’s laws.
Choose Your Agent Carefully: Select someone you trust to act in your best interest. This could be a spouse, adult child, close friend, or even a professional fiduciary. You can also name backup agents in case your first choice is unable or unwilling to serve.
Define the Scope of Authority: Be specific about what powers your agent will have. For example, do you want them to manage only certain accounts or all financial matters? Do you want them to make end-of-life decisions?
Consult an Attorney: While not required, working with a legal expert can help ensure your documents are enforceable and thorough. They can also address nuances like state-specific notarization or witness requirements.
Sign and Notarize According to State Law: Most states require at least one witness and a notary public to validate your signature. This step is essential for the DPOA to be legally binding.
Distribute Copies and Store Safely: Give copies to your agent, backup agents, financial institutions, and health care providers as needed. Keep the original in a secure but accessible place.
A Durable Power of Attorney Is Just One Piece of the Puzzle
While a DPOA is a cornerstone of your planning, it shouldn’t stand alone. Other essential documents include:
Last Will and Testament – Directs how your assets are distributed after death and names guardians for minor children.
Living Will – Outlines your preferences for medical care in scenarios where you can’t communicate.
Living Trust – Helps manage your assets during life and can avoid probate after death.
All of these tools work together to protect your interests and provide peace of mind for you and your loved ones.
The Bottom Line
Making a durable power of attorney is not just about protecting your assets. It is also about ensuring your wishes are known, even when you cannot speak for yourself. With the right planning and trusted individuals in place, you’ll ensure that your health and financial decisions stay in the hands of those who know and respect your wishes.
Sources:
https://www.thepennyhoarder.com/retirement/durable-power-of-attorney/
Disclosure:
This information is an overview and should not be considered as specific guidance or recommendations for any individual or business.
This material is provided as a courtesy and for educational purposes only.
These are the views of the author, not the named Representative or Advisory Services Network, LLC, and should not be construed as investment advice. Neither the named Representative nor Advisory Services Network, LLC gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information.