WHAT IS DURABLE POWER OF ATTORNEY?
DURABLE POWER OF ATTORNEY authorizes someone, called “attorney-in-fact” or “agent” to have power over assets held in someone’s name personally for assets not held in a revocable trust. There are a general power covering all of a someone assets and limited to a limited assets or specific time. If you get incapacitated DURABLE POWER OF ATTORNEY PREVENTS the need to establish a Conservatorship to control the Estate.
The first provision for a Durable Power of Attorney for Financial Affairs is
to name the primary agent(s) and alternate agent(s), if any, to act in the
place of the Principal (the person making the Power of Attorney).
Usually, the first person named is the person’s spouse, followed by the same
people fulfilling the role of Successor Trustee. However, this is not always the case, such as when a spouse is suffering from the onset of senile dementia or Alzheimer’s. Also, the agent(s) and alternate agent(s) can be different people from the Successor Trustees.
The difference between power of attorney and durable power of attorney is that the later will continue in place when the person becomes incapacitated. The power of attorney which in nor ” durable ” take place as soon as it signed and ended as soon as person get incapacitated.
Durable power can be financial only or enable person to make a medical decision for the principal.
HERE ARE SOME COMMON EXAMPLES FINANCIAL POWERS OF ATTORNEY
Real and Personal Property
Motor Vehicles Stock
Bond Transactions Financial Institutions (bank/investment accounts)
Insurance/Annuities
Beneficial Interests
(in another trust,probate estate, etc.)
Electronic Communications /Digital Assets
Retirement Plans and Benefits Claims and
Litigation
Tax Matters /Governmental
Benefits
Resignation From
FIDUCIARY DUTY
In any event, the agent who is acting under a Power of Attorney have a “fiduciary duty” to the Principal, meaning that he must act in the best interests of the Principal.
A Durable Power of Attorney (DPOA) is a crucial legal document that grants an individual, known as the attorney-in-fact or agent, the authority to manage the personal assets and financial affairs of another person (the principal). Unlike a standard Power of Attorney, which becomes ineffective if the principal becomes incapacitated, a Durable Power of Attorney remains in effect, ensuring continuous management of the principal’s assets without the need for establishing a Conservatorship to control the estate.
The primary function of a DPOA for Financial Affairs is to designate one or more individuals to act on behalf of the principal. Typically, the principal’s spouse is named as the primary agent, with additional agents or alternate agents lined up should the primary be unable or unwilling to serve. It’s worth noting that the designated agent(s) might not always be the same individuals who are named as Successor Trustees in a trust, especially in situations where the spouse may not be capable due to health concerns such as senile dementia or Alzheimer’s disease.
The durability aspect is what differentiates a Durable Power of Attorney from a regular Power of Attorney. A DPOA remains valid and in effect even if the principal becomes incapacitated, whereas a non-durable Power of Attorney ceases to be effective under such circumstances. This feature is particularly important for ensuring the principal’s affairs can be managed without interruption during periods of incapacity.
A Durable Power of Attorney can be tailored to include a wide range of financial powers, such as:
- Management and sale of real and personal property
- Handling transactions involving motor vehicles
- Managing stock and bond transactions
- Overseeing financial institution accounts (banks and investments)
- Managing insurance policies and annuities
- Handling beneficial interests (e.g., in trusts, probate estates)
- Managing electronic communications and digital assets
- Overseeing retirement plans and benefits
- Addressing claims and litigation
- Managing tax matters and governmental benefits
- Resigning from fiduciary positions on behalf of the principal
Additionally, the agent under a DPOA has a fiduciary duty to the principal. This means the agent is legally obligated to act in the principal’s best interest at all times, making decisions that benefit the principal rather than the agent. This fiduciary responsibility is a critical aspect of the DPOA, ensuring that the principal’s affairs are managed ethically and responsibly.
In summary, a Durable Power of Attorney is an essential estate planning tool that allows for the seamless management of a person’s financial affairs, even in the event of incapacitation. It provides peace of mind to the principal, knowing their affairs will be handled according to their wishes by a trusted individual or individuals.
