Durable Powers of Attorney - Introduction
To grant power of attorney to someone is to give them control of what happens to your property. If you are, for some reason, unable to manage your own estate, you would grant power of attorney to some other responsible entity. However, if you become mentally or physically disabled, their power of attorney would be revoked; to prevent this, you would grant them durable power of attorney. If you don't grant powers of attorney to someone, then your spouse or relatives will have to go to court after you become disabled to assume responsibility for your estate. It is extremely important to establish a durable power of attorney if there is a likelihood that health problems will incapacitate you from controlling your finances in the near future.
There are two ways in which you can assign durable powers of attorney: springing, or non-springing. Springing powers of attorney only take effect when you are unable to manage your own estate. Non-springing powers of attorney are in effect even before you become physically or mentally disabled.
However, regardless of the way in which they are assigned, the powers of attorney that you grant to someone end upon your death. Durable powers of attorney are used only for dealing with financial planning and management of your estate while you live. If you want to assign someone to distribute your estate upon your death, you need to assign that person as the executor of your will; see here for details on writing a will.
Questions & answers about Power of Attorney:
What's a Power of Attorney?
A Power of Attorney is a legal instrument that is used to delegate legal
authority to another. The person who signs (executes) a Power of Attorney
is called the Principal. The power of Attorney gives legal authority to
another person (called an Agent or Attorney-in-Fact) to make property, financial
and other legal decisions for the Principal.
A Principal can give an Agent broad legal authority, or very limited
authority. The Power of Attorney is frequently used to help in the event
of a Principal's illness or disability, or in legal transactions where
the principal cannot be present to sign necessary legal documents.
Are there different types of powers of attorney?
Yes. There are "Nondurable," "Durable," and
"Springing" Power of Attorney. A "Nondurable" Power
of Attorney takes effect immediately. It remains in effect until it is
revoked by the Principal, or until the Principal becomes mentally incompetent
A "Nondurable" Power of Attorney is often used for a specific
transaction, like the closing on the sale of residence, or the handling
of the Principal's financial affairs while the Principal is traveling outside
of the country.
A "Durable" Power of Attorney enables the Agent to act for
the Principal even after the Principal is not mentally competent or physically
able to make decisions. The "Durable" Power of Attorney may be
used immediately, and is effective until it is revoked by the Principal,
or until the Principal's death.
A "Springing" Power of Attorney becomes effective at a future
time. That is, it "springs up" upon the happenings of a specific
event chosen by the Power of Attorney. Often that event is the illness
or disability of the Principal.
The "Springing" Power of Attorney will frequently provide
that the Principal's physician will determine whether the Principal is
competent to handle his or her financial affairs. A "Springing"
Power of Attorney remains in effect until the Principal's death, or until
revoked by a court.
When is it appropriate to use a "Durable" or "Springing"
Power of Attorney?
"Durable" and "Springing" Powers of Attorney are
frequently used to plan for a Principal's future incapacity or disability
and loss of competence resulting, for example, from Alzheimer's Disease
or a catastrophic accident.
By appointing an Agent under a "Durable" or "Springing"
Power of Attorney, the Principal is setting up a procedure for the management
of his or her financial affairs in the event of incompetence or disability.
A "Nondurable" Power of Attorney enables a Principal to decide
in advance who will make important financial and business decisions in
They are also helpful in avoiding the expense of having a court appoint
a Guardian to handle the Principal's affairs in the event of incompetence
What kinds of legal authority can be granted with a Power of Attorney?
Whether "Nondurable," "Durable," or "Springing,"
a Power of Attorney can be used to grant any, or all, of the following
legal powers to an Agent:
- Buy or sell your real estate
- Manage your property
- Conduct your banking transactions
- Invest, or not invest, your money
- Make legal claims and conduct litigation
- Attend to tax and retirement matters
- Make gifts on your behalf
How do I select an Agent for a Power of Attorney?
You should choose a trusted family member, a proven friend, or a professional
with an outstanding reputation for honesty. Remember, signing a Power of
Attorney that grants broad authority to an Agent is very much like signing
a blank check.
Certainly, you should never give a Power of Attorney to someone you
do not trust fully. And do not allow anyone to force you into signing a
Power of Attorney.
Can I appoint more than one Agent in a Power of Attorney?
Yes. You may appoint multiple Agents. If you appoint two or more
Agents, you must decide whether they must act together in making decisions
involving your affairs, or whether each can act separately.
There are advantages and disadvantages to both forms of appointment.
Requiring your Agents to act jointly can safeguard the soundness of their
decisions. On the other hand, requiring agreement of all your Agents can
result in delay or inaction in the event of a disagreement among them,
or the unavailability of one of them to sign legal documents.
Allowing your Agents to act separately may ensure that an Agent is always
available to act for you. But it may also result in confusion and disagreements
if the Agents do not communicate with one another, or if one of them believes
that the other is not acting in your best interests.
Powers of Attorney are only as good as the Agents who are appointed.
Appointing a trustworthy person as an Agent is critical. Without a trustworthy
Agent, a Power of Attorney becomes a dangerous legal instrument, and a
threat to the Principal's best interests.
Once I sign a Power of Attorney, may I continue to make legal and
financial decisions for myself?
Yes. The Agent named in a Power of Attorney is your representative,
not your "boss." As long as you have the legal capacity to make
decisions, you can direct your Agent to do only those things that you want
What are an Agent's obligations to a Principal?
The Agent is obligated to act in the best interests of the Principal,
and to avoid any "self-dealing." Self-dealing is acting to further
the selfish interests of the Agent, rather than the best interest of the
An Agent appointed in a Power of Attorney is a fiduciary, with strict
standards of honesty, loyalty and candor to the Principal. An Agent must
safeguard the Principal's property, and keep it separate from the Agent's
personal property. Money should be kept in a separate bank account for
the benefit of the Principal. Agents must also keep accurate financial
records of their activities, and provide complete and periodic accountings
for all money and property coming into their possession.
Make clear to your Agent that you want accurate records of all transactions
completed for you, and to give you periodic accountings. You can also direct
your Agent to provide an accounting to a third party-a member of your family
or trusted friend-in the event you are unable to review the accounting
Is it possible for an Agent to steal my money and property?
Yes. A Power of Attorney can be abused, and dishonest Agents have
used Powers of Attorney to transfer the Principal's assets to themselves
and others. That is why it is so important to appoint an Agent who is completely
trustworthy, and to require the Agent to provide complete and periodic
accountings to you or to a third party.
Can a transfer of a Principal's assets to other people be a good
Yes. A Principal may want to authorize transfers or gifts property
for estate planning and other valid purposes.
Who monitors the actions of my Agent?
There is no official or government monitoring of Agents acting pursuant
to Power of Attorney. That is the responsibility of the Principal. It is
therefore important to insist that your Agent keep accurate records of
all transactions completed for you, and to provide you with periodic accountings.
You might also direct your Agent to give an accounting to a third party
in the event you are unable to review the accounting yourself.
Should a Principal, member of the Principal's family or a friend
have grounds to believe that an Agent is misusing a Power of Attorney,
the suspected abuse should be reported to the police or other law enforcement
authority to protect the Principal from the loss of his or her property.
Consider asking a lawyer for help and advice.
What can I do if my Agent does not follow my instructions?
You may revoke your Power of Attorney at any time.
You should inform your Agent, in writing, that you are revoking the
Power of Attorney. Request the return of all copies of your Power of Attorney.
You should notify your bank or other financial institution where your
Agent has used the Power of Attorney that it has been revoked.
If you decide to revoke a Power of Attorney, it is probably in your
best interests to consult a lawyer, and arrange to have a new Power of
How many copies of a Power of Attorney should I sign?
You are required to sign (execute) only one copy. However, it is not
unusual for a Principal to sign several original copies. Banks and financial
institutions, for example, generally require an original or a certified
copy before allowing an Agent to transact business on the Principal's behalf.
And banks frequently provide customers with their own Power of Attorney
Do I need to have my signature witnessed on a Power of Attorney?
Yes. Your signature on the Power of Attorney must be witnessed in accordance with the laws of your state.
Do I need a lawyer to prepare a Power of Attorney?
No. You're not required to hire a lawyer. However, because a
Power of Attorney is such an important legal instrument, the careful consumer
will consult a lawyer who can:
- provide legal and other advice about the powers that are appropriate
to be delegated
- provide counsel on the choice of an Agent:
- Outline the Agent's legal and fiduciary obligations while acting under
a Power of Attorney; and
- ensure that the Power of Attorney is properly executed and meets all
The typical Fee for preparing a Power of Attorney is modest. Before
engaging a lawyer to prepare a Power of Attorney, inquire about the fee,
and feel free to get prices from other lawyers and law firms.