General Durable Power of Attorney: The Basics
A general durable power of attorney is a key part of estate planning. Wills and trusts are usually the first things that come to mind as an individual considers their estate plan or potential estate plan, but the importance of having detailed power attorney documents cannot be understated.
What Does it Do?A general durable power of attorney grants a named individual (called the "attorney-in-fact" or "agent") the authority to act on your behalf with respect to whatever matters are designated in the document. This in turn means that the document needs to be clear, concise and carefully crafted to meet your needs. In short, a general durable power of attorney is about your ability to have your property, legal affairs, business dealings and financial matters handled effectively, conveniently and quickly in the event of difficult or unforeseen personal circumstances. Without a power of attorney, if you become mentally incapacitated, someone would have to seek the appropriate determination through a court process to be granted authority to make these sorts of decisions. In addition to the obvious timeliness and convenience problems of not having a power of attorney, the door would also remain open to disputes regarding your capacity and ability to make your own decisions. In the event of any question as to your whereabouts, further complications would also be anticipated.
Immediate vs. SpringingThere are two fundamentally different types of power of attorney documents: (1) an "immediate" power of attorney, and (2) a "springing" power of attorney. An "immediate" power of attorney grants authority to the agent immediately upon your signing of the document. In other words, if you sign an immediate power of attorney, you are giving someone immediate authority to act on your behalf. A "springing" power of attorney grants authority that only becomes effective if you are shown to be mentally incapacity (unable to manage your own affairs)--which would typically be accomplished by ca signed certification from a physician.
Limited Scope vs. Broad ScopeA power of attorney can be prepared in such a way to be as narrow or as broad as you would like. For example, an individual could sign a power of attorney granting to someone else authority to manage one particular piece of property for a limited period of time. Conversely, one could prepare a power of attorney than it is very broad, granting the named agent wide-ranging authority handle various types of matters. It could be intended to last forever. The possibilities of the breadth and scope of powers given in this type of document (whether narrow or broad) are endless. In short, a power of attorney should be prepared so to reflect and effectuate your wishes within the parameters you want in place.
For many clients, it makes sense to have a very broad-ranging power of attorney. When considering the potential of, at some future point, becoming mentally incapacitated, having a thorough and broad power of attorney can go a long way to protecting assets, family members and related estate planning. The scope of potential powers to be included usually includes banking, taxes, business matters, estate planning, safe deposit box access, investment, trusts, gifting, personal care and various other matters.
What Does "Durable" Mean?The term "durable" when applied to a power of attorney, simply means that it continues to be effective and binding even after the person signing it has become mentally incapacitated. There are some instances in which someone might prepare a non-durable power of attorney (which would terminate when the person giving the authority loses mental competence) but in the context of estate planning, it is almost always preferable to have a "durable" power of attorney.