What Is a Durable Power of Attorney?

As you or other family members work on estate planning or getting affairs in order, you may wonder how a durable power of attorney might work for your specific situation. It is designed to help you carry out your wishes under certain circumstances.

Power of Attorney vs. Durable Power of Attorney

A power of attorney (POA) is a legal document that names someone to make decisions on your behalf. This person is sometimes called an agent or an attorney-in-fact. Typically, you can also designate an alternate agent in case the person you named isn’t available or willing to serve in that capacity.

The Types of Power of Attorney (POA)

An ordinary or nondurable power of attorney automatically ends if you become incapacitated. This means that if you are no longer able to make decisions due to illness or injury, the ordinary POA is rendered null, leaving your family to seek alternative legal measures to manage your financial affairs.

A durable power of attorney means that the document remains active even if you become unable to make your own decisions. It ensures that your agent retains the authority to manage your affairs without interruption. This can help provide a seamless transition to help control and safeguard your interests during a time when it may be needed.

If you don’t have a durable POA, loved ones may need to consider other options, including hiring an attorney to petition a court to appoint a guardian or conservator. If you’re married, the state would likely name your spouse. Or, it might name your adult children or parents if a spouse is not available or present. Even if the court appoints a family member, this process can still be time-consuming and stressful during an already challenging time.

Another alternative includes naming a trusted individual as a trustee to your revocable trust to step in and handle your financial matters.

What Authorities Could Be Included in a Durable Power of Attorney?

A durable POA generally covers your finances. The document can also cover health care, but standard forms may not always include health care decisions. A qualified attorney can help you with your options.

Durable Power of Attorney for Financial Matters

This document covers your finances. When you designate a financial agent or POA, you typically may give them as much or as little authority as you want. You might specifically allow the agent to manage your retirement accounts, file your income taxes or make gifts and charitable contributions, but your agent is legally required to act in your best interests. They must keep your assets separate from their own and don’t have the authority to do whatever they wish.

The process to set up a financial POA varies by state, but most require a notarized signature. The agent is also required to sign paperwork acknowledging their awareness and understanding of their power and restrictions to act.

Some states require a POA to be recorded with local government authorities before the agent can act regarding real estate transactions. A durable POA for financial matters may be generally revoked at any time before the person granting it becomes incapacitated. It automatically ends when the person who granted it dies.

Durable Power of Attorney for Health Care

This document is also known as a medical POA, but different states use different terms and have their own rules around how to set them up. You should consider consulting an attorney to make sure the forms fit with your state’s laws.

The document will include a section to name your health care agent (also called a surrogate or proxy) and relevant instructions as well as successors. It could also include your choices regarding organ donation and other health care directives and the option to designate a physician to make decisions.

Some states combine a health care POA and a living will, but each state is different. You can find specific forms and rules by contacting the attorney general’s office for your state or your local Area Agency on Aging .

Update Your Durable Power of Attorney

You should review and update these documents regularly (every three to five years or sooner if you experience a major life event). Some states will automatically revoke a former spouse’s authority to act as agent upon divorce—others may not.

The decision to appoint an agent is an important personal and legal decision. A consultation with a trust and estate planning attorney may help you ensure your estate plan is up to date, including your power of attorney forms.

Thinking through your future financial and medical needs now may provide peace of mind to your loved ones—especially in times of crisis.