When you're unable to make decisions for yourself, it's too late to start thinking about protecting your assets and interests. You have to cover all your bases now, while you're still able to coherently decide what's best for you.
The way to do that is with a Durable Power of Attorney. It protects your interests while you're unable to do so and safeguards your loved ones by removing any ambiguity about how you wish to handle things while incapacitated.
A power of attorney is a document that authorizes someone to act on your behalf in most legal matters. In other words, they can represent your interests and make decisions in your stead as if you were present.
This doesn't mean the designated agent can act callously. Under the law, your chosen agent has a fiduciary obligation to act in a manner consistent with your best interests. This doesn't need to be stated in the document, as it is implied by the statute governing such a contract.
A Durable Power of Attorney is a similar document. However, it has the distinction of remaining in effect even if you become incapacitated. In contrast, an ordinary power of attorney is only in effect while you are legally competent.
Depending on your state, a Durable Power of Attorney may also be known as:
DPOA
Enduring Power of Attorney
Durable POA
Durable Finance Power of Attorney
Anyone serious about their estate planning should consider having a Durable Power of Attorney. Ultimately, a Durable Power of Attorney addresses an unpredictable condition. So, it's a good idea to have one regardless of your circumstances.
There are situations when a Durable Power of Attorney is highly advised. For example, if you're scheduled to undergo a serious medical procedure or are employed in a high-risk profession. Essentially, create or revise a Durable Power of Attorney in advance of any event that may render you unable to make decisions for yourself.
Don't forget to review your designated agent periodically. If your agent is likely to be in a similar state of jeopardy, you might consider creating another Durable Power of Attorney to remain covered.
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Creating a Durable Power of Attorney is not a complicated process. The most important decision you'll have to make is selecting a trustworthy agent who has the presence of mind to make judicious decisions on your behalf.
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To create your document, please provide:
Date of Execution: The date from which the terms of the DPOA will be in effect. It may start when it is signed, but it's usually created to begin upon your incapacitation.
The Principal: Name and address of the person granting the Durable Power of Attorney.
Designated Agent: Name and address of the person receiving the Durable Power of Attorney.
Coagents: Other agents that will have to act unanimously to make decisions, if such agents exist.
Successor Agent: An agent who will replace the first listed agent, should that agent be unable or unwilling to act on your behalf.
Authorities: Areas of your financial interests regarding which agent or agents are empowered to make decisions.
Advance Directive: A catch-all term that describes any document in which one person gives instructions to another regarding their care in the future.
Fiduciary: A person who has to act in a way that benefits another person and freely enters that obligation.
Incapacitated: A state of being temporarily or permanently unable to make rational decisions or take responsible actions.
Springing Durable Power of Attorney: A special type of Durable Power of Attorney that becomes valid in response to a specific event.
Generally, a Durable Power of Attorney must be signed by the principal and all the listed agents to be valid, although signing requirements vary across state lines. Some states require witnesses, a notary public, or both to sign the document. Some states don't even require the agent to sign. Check the laws in your jurisdiction before signing the Durable Power of Attorney.
A Durable Power of Attorney is not a matter of public record. As such, it usually doesn't need to be filed with any state or local agency. The exception to this is South Carolina, which requires you to record a power of attorney for it to be durable.
However, the principal and every listed agent should retain a signed copy for their personal records. Since the document may be needed on short notice, it's a good idea to have a copy with your attorney. Don't keep it in a safety deposit box, which may be difficult to access when most needed.
Additionally, you may choose to file a copy with the records office of any county where you own real estate. While this is advisable, it's not always required. Some counties will have specific requirements before you're allowed to file your Durable Power of Attorney.
The essential difference between the two is that the former ends when the principal becomes incapacitated. Whereas a Durable Power of Attorney is so called because it continues at the principal’s incapacity. Both will expire upon death. However, even a Durable Power of Attorney can be revoked, such is the case if divorced spouses neglected to update the paperwork.
You can revoke any type of power of attorney in one of three ways: you can issue a power of attorney revocation on 360 Legal Form, for one, and have it sent to the agent; Another option is to assign another agent to replace the current. Finally, in the event of the principal’s death, a Durable Power of Attorney is automatically revoked.
An agent to your POA does not have the power to change your will or trust documents. Furthermore, an agent does not have the right to transfer their power to another person. The primary reason is that the appointed agent has a fiduciary duty towards the principal to act in their best interests. If there's a suspicion of fiduciary betrayal, a power of attorney can be challenged in court.
Many people pick their attorneys, relatives, friends, or spouses to give a POA to. Needless to say, you should only give it to trusted people who don’t have a conflict of interest.
No. A Durable Power of Attorney typically only allows agents to make decisions about the management of financial and real assets. To assign an agent for medical decisions, you'll need another type of advance directive called a Medical Power of Attorney. If you don't have such a document, a court will appoint a conservator to make medical decisions on your behalf.
There is no explicit requirement that you should pay someone to be your Durable Power of Attorney agent. However, unless the Durable Power of Attorney explicitly states otherwise, some states allow your agent to allocate compensation to themselves to cover expenses.
Generally speaking, all states will recognize Durable Powers of Attorney created in other states. However, it's a good idea to check with an attorney in that state if you have the opportunity. If you have any doubts, start with a generic Durable Power of Attorney and ask a lawyer to help you ensure it can be probated in every state.
In most cases, no. You don't need to file a Durable Power of Attorney for it to be valid in most states. However, if your agent needs to make decisions involving real estate on your behalf, it helps to have the Durable Power of Attorney on file at the county records office where you own property.
No. A Durable Power of Attorney lists the areas in which an agent is allowed to act. Unless specifically listed, the document does not allow agents to make decisions about any of your affairs.
Furthermore, the agent is legally required to comply with the stipulations of the Durable Power of Attorney. Failure to do so could result in financial liability for any damages caused by their actions.
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