A durable power of attorney remains valid if the principal becomes incapacitated, while a general power of attorney ends upon incapacitation. Choosing the right power of attorney ensures seamless decision-making in legal, financial, and medical matters.
By Brad Nakase, Attorney
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You may have started taking care of your elderly parents, and you are now interested in providing them with a more comprehensive level of help. Power of Attorney (POA) is the legal word for being appointed as an agent, and estate planning is a perfect time to bring it up.
An effective tool for estate planning, a power of attorney (POA) can be structured with a variety of powers to address various situations. Powers of attorney can be either general or durable, depending on your needs. In terms of legal power, they are nearly interchangeable; yet, there is a crucial distinction between the two. So, how are Durable Powers of Attorney different from General Powers of Attorney? If you want to know which choice may be ideal for your loved ones, you should keep reading.
One way to delegate decision-making and action-taking responsibilities to another person without your direct involvement is through a power of attorney, a legally binding instrument. An agent or attorney-in-fact is someone who acts on the principal’s behalf. It is not necessary that the individual chosen be a lawyer.
A durable power of attorney, or DPOA for short, is a legal instrument that grants an agent the authority to make decisions on behalf of the principal in the event that they become mentally or physically unable to do so.
As a general rule, a durable power of attorney will be in force until the principal either dies or revokes the powers. However, there are a few exceptions to this rule, such as when the principal gets divorced and the spouse was the agent, or when the court rules that the instrument is invalid or revokes the agent’s authority.
The law grants you the power to make decisions on your parents’ behalf if they name you as their agent under a Durable Power of Attorney (DPOA). No matter what happens, you will still be able to take care of them until the day they die.
As a DPOA, you may be required to carry out the following duties:
Having a durable power of attorney in place may be beneficial, depending on the principal’s needs, because a regular power of attorney terminates when the principal becomes incompetent. If you’re ill, you probably don’t want to find out that your standard power of attorney has expired at the last minute, when you could really need it.
Your responsibilities as a GPOA will come to an end in the event that your parents become disabled. This implies that you should provide assistance while they are still able to make certain decisions on their own, under your overall supervision or guidance.
In your capacity as GPOA for your parents, you may be required to do the following:
Keep in mind that a General Power of Attorney and a Durable Power of Attorney are not the same thing in this context. One fundamental fact distinguishes DPOA from POA, and that is incapacitation.
When your parents become unable to care for themselves, your authority as a general power of attorney terminates. This implies that you will lose the authority to make critical choices on their behalf in the event that they unexpectedly lose the ability to do so. An accident, serious disease, or mental disorder can render a person incapacitated.
Unless your parents remove your authority, your legal agency under a Durable POA will continue until their death. If they ever become unable to make crucial decisions for themselves, you, as their agent, will still have the power to do so.
The filing of a power of attorney with the court system is typically not necessary. Instead, the principal should include a Power of Attorney with their other estate planning forms. Make sure this is secure by storing it in a password-protected location, like an estate planning platform.
Check with the County Clerk’s and Land Title departments to see whether a Power of Attorney from your parents is necessary to complete any real estate transactions you want to carry out. Then you’ll have to get the paperwork notarized.
The principal gets to choose the precise authority their power of attorney should have, but here are a few typical ones:
Whether the power of attorney is to be wide or limited in scope is an essential consideration when drafting one. Legal, financial, business, and medical powers of attorney are all part of a general power of attorney, but restricted powers of attorney accomplish exactly what they say: they restrict the agent’s authority to act only within certain parameters.
An example of this would be the ability to sign a contract in the principal’s absence due to illness; this type of power of attorney can cover a specific procedure or event. It is also possible to include a time restriction on a limited or special power of attorney.
Two primary varieties of long-term power of attorney exist:
A spouse or other trusted family member may be the best choice to handle medical issues in a principal’s absence, while their business partner may be more suited to handle matters pertaining to their company.
It is entirely up to you and your loved ones to pick between a POA and a DPOA. Your parents should identify you as their agent in a durable power of attorney (DPOA) or power of attorney (POA) form as part of their estate plan.
You should be forthright in explaining the two choices to them and helping them choose the best one. Asking, “how can I be of service to you?” and “would you like me to be able to make choices in your place in the event of your unexpected incapacitation?” are two important questions to ask.
Although there are online tools that may help you draft a power of attorney, it’s important to keep in mind that the rules governing the creation of such a document differ from state to state. This is why it’s crucial to check that the document’s execution complies with the rules of your state.
Before drafting a power of attorney, one should give serious consideration to who they would like to have control of their affairs in the event of their incapacity and what tasks they may want an agent to complete.
Additionally, at least once a year, a person should review their power of attorney paperwork to ensure that they accurately represent their current intentions.
A person can avoid the hassle and expense of having a judge select a representative to manage their affairs when they establish a power of attorney, particularly a durable power of attorney. This will allow them to rest easy knowing that their wishes will be respected.
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