Part of planning for the stability and continuance of your assets, and the future of your heirs, includes making provision for the future through the use of wills, trusts and powers of attorney. The Estate Planning Division of Hale Carlson Baumgartner, PLC has had extensive experience in determining when a durable power of attorney will best help your planning needs. A basic understanding of the terminology of a power of attorney is helpful in understanding the recommendations that are made by Hale Carlson Baumgartner, PLC.
What is a Durable Power of Attorney?
You may have heard people use this phrase or talk about this document, but do you know how valuable and powerful a durable general power of attorney can be if drafted well? Let's take a look at the various parts of the title of the document, and then examine some of its many uses.
We begin with the simple phrase "power of attorney." This legal concept allows one person to grant to another person the power to do what he or she could do if present and available to accomplish a task. Instead, another person, the "agent" or "attorney-in-fact" is designated in writing to perform whatever task needs doing. The transfer of powers and authority is based on the legal theory of "principal-agent." The principal grants certain authority, broad or narrow, limited in time or unlimited, and effective right away or only upon the occurrence of something in the future. These features bring us to the second part of the description above.
Typically we categorize powers of attorney into two broad categories, specific or general. A "specific" power of attorney is usually drafted to perform just one task. The most common example is the purchase or sale of a house where one of the two who are buying or selling cannot attend the closing. That person would grant and provide a specific power of attorney to the party who could attend, authorizing that party to sign his or her own name on the closing documents and, in addition, to sign the name of the person who was absent using the authority of the specific power of attorney. Once the closing was finished, the specific power of attorney would have no further power.
In contrast, a "general" power of attorney often has many, many categories of powers listed and also typically includes multiple paragraphs describing broad categories of activities and functions that the principal wants the agent capable of doing in his or her absence. When the word "durable" is added to the title of the document and expressed in the body of the document, it means that the principal intends for the powers of the agent to continue even if the principal has lost the capacity, temporarily or perhaps permanently, to competently make decisions. For a person who is competent and legally responsible for his or her actions, the grant of a power of attorney can be withdrawn as a matter of right. If that same person has lost the legal capacity to act, he or she is signaling by the word "durable" that the agent should continue exercising the powers of the durable general power of attorney throughput the period of incapacity, no matter how long that period might last.
What a Durable Power of Attorney Can Do For You?
No power of attorney, whether specific or general, durable or not, survives as a grant of authority after the death of the principal. Nevertheless, its enormous value during any period of incapacity is hard to measure. The agent can handle the financial affairs for an incapacitated principal, and help provide for the care, health, maintenance, and support of that person throughout a period of ill health or hospitalization. The agent who receives authority to act under a durable general power of attorney is a "fiduciary" who has a duty to act with the best interests of the principal in mind. These kinds of documents are an essential element of any well-written estate plan.
