What Is a Durable Power of Attorney, and How Does It Work?

A power of attorney is a legal document that allows someone else to handle your legal, medical, or financial affairs. General powers of attorney cover a wide range of transactions, while limited powers of attorney cover only specific situations. Powers of attorney can be ordinary or durable.

Power of attorney

An ordinary power of attorney expires if you become mentally incompetent, or on the date or event stated in the POA document. It's commonly used to make it easier and more convenient to conduct business transactions.

You can use an ordinary POA to designate an agent to handle certain types of financial transactions or sign certain documents on your behalf. For example, a POA might authorize a car dealer to register your new vehicle for you, enable a real estate agent to sign certain closing documents for you, or authorize an agent to handle your finances while you're out of the country for an extended time.

Durable power of attorney

A durable power of attorney also authorizes an agent to handle financial and legal matters for you, but it includes unique wording that makes it effective even if you become incapacitated. The purpose of a durable POA is to plan for medical emergencies, cognitive decline later in life, or other situations where you're no longer capable of making decisions. There are two types of durable POAs—one for financial matters and one for medical matters—and they are usually contained in separate documents. Most estate plans include durable POAs along with a last will and testament.

What is a general durable power of attorney?

A general durable power of attorney authorizes someone to act in a wide range of legal and business matters and remains in effect even if you become incapacitated. The document is also known as a durable power of attorney for finances. The POA can take effect immediately or can become effective only if you are incapacitated. Even if your POA is immediately effective, you don't have to use it right away—you can continue to handle your own finances just as you always have.

The person you appoint in your POA is known as your agent, or attorney in fact, although they don't have to be a lawyer. An attorney in fact can handle many types of transactions on your behalf, including:

• Buying and selling property and other assets
• Managing bills, bank accounts, and investments
• Filing tax returns
• Applying for government benefits

If you become incapacitated through illness, accident, or mental decline as you age, a general durable POA allows the agent you have selected to step in and handle your finances right away. If you don't have a general durable power of attorney, your family may have to go to court and have you declared incompetent before they can take care of your finances for you.

Durable power of attorney for health care

A durable healthcare power of attorney is useful when a medical emergency leaves you unconscious or otherwise unable to make choices about your care. It appoints a family member or other health care agent to communicate with doctors and make decisions about your medical treatment. A medical durable power of attorney makes it easier for your loved ones to work with health care providers to get the care you need.

A medical durable power of attorney document differs from a living will, which details the medical treatments you want at the end of your life. A power of attorney for health care allows your agent to make medical decisions any time you are incapacitated, even if you're expected to make a full recovery.

Acting as attorney in fact

If you hold power of attorney for someone else, bring a certified copy of the document with you when you conduct business or communicate with health care providers. If you're signing documents as power of attorney, use your name and then indicate that you're signing as power of attorney. Ask about the preferred format before you sign.

Living will

A living will, also known as an advance directive, describes your wishes for medical care at the end of your life. It deals specifically with treatments that would prolong your life if you're terminally ill or permanently unconscious with no hope of recovery. The living will only comes into play if you're unable to communicate your wishes yourself.

A living will helps loved ones and health care providers make decisions about treatment. It means your family doesn't have to guess at what you would have wanted. Most states have a standard form for a living will.

Obtaining and removing durable powers of attorney

You can create a durable POA using a POA form online. It must be signed, and depending on your state it may need to be witnessed or notarized. It's helpful to talk to an attorney about your estate planning needs so they can recommend the POAs and other estate planning documents that will work best for your situation.

You might appoint a close friend, adult child, or other relative as your agent. It's important to choose a person you trust completely, since a general POA gives your agent considerable financial powers. The person you designate as your medical POA does not need to be the same person you name to make financial decisions. You can also designate alternate agents in case your first choice is unable to serve. Be sure they're willing to take on the responsibility before you sign a durable POA.

You can revoke a durable POA at any time, as long as you're of sound mind. You should do this in writing. It's also a good idea to notify financial institutions and other businesses that your agent has dealt with. Durable POAs automatically terminate on the death of the person granting the power of attorney.

The question of who can override a power of attorney for a loved one is more difficult. If you believe someone is abusing their position as power of attorney, you may be able to go to court to have them removed. An attorney with experience in both estate planning and elder law can help.

Sample durable power of attorney form for US states

Durable Power of Attorney requirements vary significantly across the United States. Each state has its own laws regarding execution, witnessing, notarization, and the specific language needed for validity. Here are the representative sample document(s) for each US state. These materials are for informational purposes only and do not constitute legal advice. Because laws and requirements can change and individual circumstances can vary, your final forms, documents, and filings may differ depending on your state. It is highly recommended to consult a qualified attorney to ensure your POA complies with applicable state laws and meets your needs.

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