Durable Power of Attorney: What It Does and Who to Give It to

Planning for the unexpected is one of the most thoughtful things you can do for yourself and the people you care about. If you were ever in an accident or became seriously ill, who would make decisions for you? It’s better to have a Power of Attorney before an emergency occurs.

A Durable Power of Attorney lets you answer that question on your own terms. You get to choose a trusted person to carry out your wishes, which can help avoid costly, time-consuming legal battles down the road. This article walks you through the different types of Durable Powers of Attorney and what's involved in setting one up.

What does a Durable Power of Attorney do?

A Durable Power of Attorney (DPOA) is a legal document that grants someone else the authority to act on a person's behalf in certain circumstances. 

Even if you’re married, your spouse may be limited in acting on your behalf in certain situations. For example, you can’t sign any legal documents just because you’re married, which can delay things if you’re signing up for a joint bank account or filing joint tax returns. 

Important Note:

A DPOA is a less expensive alternative to a court-ordered guardianship or conservatorship. 

The difference between a Power of Attorney and a Durable Power of Attorney

A Power of Attorney is a legal document in which a principal appoints an agent to act on the principal’s behalf. Normally, a Power of Attorney ends when the principal loses mental capacity.

A Durable Power of Attorney, like any legal document, remains in effect even if the principal becomes incapacitated. This could happen if the principal loses consciousness following a car accident. A Durable Power of Attorney ends when either the principal dies or revokes it.

A Durable Power of Attorney can be drafted to only be in effect when you become incapacitated or immediately, and you can even designate different rules for different people. Like you may want your spouse to have powers immediately, but may choose someone else to act in the event of your incapacity.

What DPOAs permit your agent to do

You can use a DPOA to cover both health and financial decisions, giving your agent authority over a broad range of your affairs, such as:

• Paying your bills, like mortgage or rent payments.
• Filing your tax returns.
• Making medical decisions for you (very limited, and will not override an advance directive/living will).
• Sign contracts on your behalf.
• Choosing where you live.
• Depositing and withdrawing money from your bank and investment accounts.
• Opening and closing your financial accounts.
• Purchasing property in your name.

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The two types of DPOAs

The Durable Powers of Attorney for medical and financial decisions are the two most common types of DPOAs. You can choose to combine these into a single DPOA or keep them separate. The most common reasons to separate these two types are to use different agents, to maintain privacy between medical and financial matters, or due to complexity.

Durable Power of Attorney for finances

If there’s a decision involving the purchase or sale of property, then the Durable Power of Attorney for finances will probably apply. It’s also helpful when paying bills, applying for government benefits, and filing taxes. Besides incapacity, many Durable Powers of Attorney for finances are used for convenience reasons.

Health Care Power of Attorney (HCPOAs)

An HCPOA is a key planning document for medical arrangements. It’s useful because medical problems and accidents can lead to incapacitation, even if temporary. If this happens, an agent can choose treatments for you. They can also make end-of-life choices, if needed. 

How to choose the right agent for your Power of Attorney

Choosing an agent is one of the most important decisions in your estate plan; don't rush it. It’s a critical decision that, if made incorrectly, could result in your wishes not being carried out the way you would want.

To help make this selection, there are several qualities you want your potential agent to have:

• A strong sense of responsibility.
• The ability to understand financial and medical decisions.
• Reliability and trustworthiness.
• A clear understanding of your values and wishes. 
• Organizational skills.
• The availability to serve as your agent when needed.
• Overall good health.

The law requires your agent to act in your best interests and honor your wishes. Despite this, it’s still important to have an honest talk with them to confirm their willingness and ability to serve as your agent.

If you’re having trouble finding one person who meets most of these qualities, consider choosing two agents. You can require them to both agree before making a decision, or you can authorize them to act independently. 

In case your first choice is unavailable or unwilling to serve as your agent, you can select a successor agent. 

If you have other estate plan documents, such as a trust, it is important to ensure that the people you appoint work well together. A trustee will likely control trust assets during your incapacity. If your POA and trustee are different people, there is potential conflict on how things are handled or confusion about responsibility.

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How to make your Durable Power of Attorney legally binding

There are strict requirements for creating a Durable Power of Attorney. Most states require you to sign your Durable Power of Attorney before a notary.

Some states have other requirements. For instance, in Arizona, another person must witness and sign the Power of Attorney. If your state requires a witness, there are usually specific requirements about who isn’t allowed to serve as this witness. Arizona doesn’t allow this witness to be the agent, the agent’s spouse, the agent’s child, or the notary public.

States also differ in their execution requirements. For example, an Illinois HCPOA doesn’t need to be notarized. However, a POA for real estate transactions must be notarized.

Every state and Power of Attorney is different. This is why you should consult with a lawyer to confirm what your state requires to make your Power of Attorney legally valid.

Help ensure all your wishes are carried out with a LegalShield® Membership

Figuring out your Durable Power of Attorney is an important step, but it's just one piece of a complete estate plan. You may also need documents like a Will or a healthcare directive to make sure all your wishes are covered.

A lawyer can help you think through whether a Durable Power of Attorney makes sense for your situation, which type is right for you, and what your state requires to make it legally valid.

If you’re thinking about a Durable Power of Attorney, contact LegalShield to learn more about its Personal Plans and get started protecting you and your family’s future. 

Frequently asked questions

When does the Durable Power of Attorney take effect?

When a Durable Power of Attorney goes into effect depends on its type. A Durable Power of Attorney can give powers immediately, or upon incapacity.

Can I revoke or cancel my Power of Attorney?

You can revoke or cancel your Power of Attorney as long as you’re mentally capable of making this decision. You can also draft your Power of Attorney so that it automatically expires after a certain period or upon a specific event.

What happens to the DPOA after I pass away?

A Durable Power of Attorney ends when the principal dies. At this point, the instructions in the principal’s Will or trust take over and determine how their affairs will be handled. Most discretionary decisions will be handled by the executor or trustee at that point.

Is a DPOA the same as a Will? 

A DPOA is not the same thing as a Will. A Will is in effect after its creator dies, while a DPOA is only in effect when its principal is still alive. A DPOA also can’t be used to change the terms in a Will. Additionally, most trusts prohibit a Power of Attorney from revising it; however, a Power of Attorney may be able to help with trust funding.

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