A durable power of attorney allows you to appoint an agent to make financial decisions on your behalf should you ever become incapacitated. This can be a critical estate planning tool to ensure that your finances are managed properly and for your benefit, and should be part of any basic estate plan.
The durable power of attorney is only effective during the lifetime of the principal. It can avoid the long and expensive process of having a court appoint a conservator or guardian to act for you, and allows you the freedom to choose who you would most want acting on your behalf. Typically, a husband and wife would appoint each other as Attorney, with another person as a back-up.
Depending on the size and complexity of your estate, the Attorney under a durable power may become very involved in your affairs. For this reason, it is important to appoint someone trustworthy and responsible.
A durable power can be either springing or immediate. A springing power does not become effective until the principal is incapacitated, thus it 'springs' into action. The immediate power is, obviously, immediate and becomes effective once signed. There are pros and cons to both options, however the springing power often requires the Attorney to get documentation proving the principals incapacity before a bank or other such institution will honor it, and therefore has more red tape associated with it.
Courts have frequently decided that if a durable power does not explicitly grant a certain power to the Attorney, that power does not exist. This is important to note because in order to be effective, an Attorney may need a broad array of powers, such as the ability to sell real estate or to give gifts to specified individuals. Beware of 'off-the-shelf' documents for this reason--if not properly drafted to your personal situation the effects can be quite damaging.
Contact an estate planning attorney to discuss how you can craft the right plan for your estate.