The term “power of attorney” refers to a legal arrangement in which one person gives another the authority to make legally binding decisions for them. The person who grants the power of attorney is the “principal,” while the person given the authority to make decisions is called the “agent.”
An agent who has power of attorney can act as the principal to the extent authorized in the document that grants the power of attorney or as specified in the law of the state where the power is granted by law.
So, of course, if a person wants to appoint a person as their agent, they want to consider the best person to be entrusted with this authority. If a person is granting a power of attorney to another, they want the person to be someone who can be trusted to make the best decisions. A person who is reliable and trustworthy is a must.
A durable power of attorney grants power of attorney to a person to make either healthcare or financial decisions, depending on the state. It lasts until the person who grants it passes away or revokes it. After a person passes away, they need a will and possibly trusts to direct management of their estate.
What Does “Durable Power of Attorney” Mean?
There are many situations in which a person might grant another the power of attorney. Most often, a power of attorney is granted for a limited purpose, and it expires automatically when the purpose has been served.
A durable power of attorney serves specific purposes, such as healthcare and financial decision-making. The main purpose of a durable power of attorney is to have an agent in place when the principal becomes incapacitated and cannot make medical or other decisions for themselves. The principal must make it explicit that this is the arrangement they want.
A durable power of attorney can cover financial and healthcare decisions in some states. In other states, a durable power of attorney covers only financial decisions, and a person must use a separate document for healthcare decisions.
For example, in Michigan and Washington, one document can grant a durable power of attorney to address health care and financial powers. In California, Texas, and Alaska, a durable power of attorney form only addresses the authority to deal with financial matters, not healthcare. Appointing a healthcare agent or proxy is accomplished with a different document. This is why it can be helpful to consult a lawyer in the state where the person wants to draft a power of attorney.
In some cases, incapacity can lead to situations that require a more involved form of care and control over the incapacitated person, such as guardian advocacy or guardianship. As mentioned, a durable power of attorney does not expire in the event of the principal’s incapacitation. On the contrary, it is designed to work in exactly such situations. If a person needs a guardian, they must go to court to establish guardianship.
How Can I Draft a Durable Power of Attorney?
Of course, various statutory forms are available online. However, they do not allow people to personalize their financial or healthcare durable power of attorney to fit their situation. It can also be easy to misunderstand legal language or to fail to execute the form correctly.
A person must check the law in their state to learn the requirements for a valid, durable power of attorney. Witnesses may have to sign the document, which must be notarized. These requirements are critically important and must be complied with, or a person runs the risk that their durable power of attorney would not be effective. For example, in the state of Washington, some banks and government agencies require that a durable power of attorney for finances be notarized to be effective.
Revocation might require formalities as well. Or a person might be able to destroy all copies simply. There are many good reasons to have a lawyer draft a person’s power of attorney. One is that their attorney could add conditions that end the power of attorney, for example, if the agent dies or if the agent is the person’s spouse and their spouse files for divorce.
In Which Situations Is a Durable Power of Attorney Most Useful?
A durable power of attorney can be extremely useful when someone wants to make important healthcare decisions well in advance. For example, if a person is injured and does not wish to be kept alive by artificial means when there is no real chance of meaningful recovery, they should make their wishes known to their family members and loved ones well in advance.
However, if their wishes are not in writing, these decisions will ultimately fall onto their next of kin, who may or may not honor them. To avoid this situation, a person can grant a durable power of attorney to a trusted friend or family member who will respect their wishes.
The agent then has the legal authority to ensure that a person’s specific healthcare preferences and instructions are carried out if they become unable to express their wishes.
What Kind of Legally-Binding Decisions Can My Agent Make On My Behalf?
Typically, agents can make two types of decisions: financial and healthcare-related decisions. The principal may legally empower an agent to:
- Keep the principal on life support or remove the principal from life support, including machines and other devices;
- Decide whether the principal should undergo surgery;
- Manage the principal’s assets, i.e,, property, both personal and real;
- Purchase or sell real estate or property in the principal’s name;
- Purchase or terminate various forms of insurance;
- File taxes on behalf of the principal;
- Establish trusts on behalf of the principal.
The scope of powers of the agent may depend on several factors, including state law, which can vary from state to state. It may be wise to consult a lawyer for advice regarding the specific laws of a certain state.
Can a Principal Designate More Than One Agent for a Power of Attorney?
Some principals may find it advantageous to have different agents fulfill different roles. For instance, a principal may want their spouse to decide healthcare-related matters and designate an adult child as their financial expert. It might be wise for the principal to divide the durable powers of attorney so their spouse has healthcare decision-making powers while the adult child manages the finances.
A word of caution is necessary. If a person grants authority to more than one agent, then there is potential conflict among the different agents. The financial agent might have to sell the house to pay the medical bills, even though the healthcare agent wants the principal to live at home. If there is more than one agent, it would be wise for the principal to spell out how to resolve disputes if they arise.
How Can a Lawyer Help with a Durable Power of Attorney?
As you might expect, granting durable power of attorney is not always simple or straightforward. If you think this type of arrangement might benefit you, you should speak with an estate lawyer in your area who practices in estate planning law, including matters such as powers of attorney.
Your attorney can provide legal advice that works for the specific laws in your area. If there are any legal disputes, your attorney can also provide representation to resolve those.
