The unpredictability of life incentivizes us to prepare for even the grimmest of scenarios. It’s why everyone should know more about the term durable power of attorney (DPOA) and how it can help us maintain some semblance of control even if things do take a turn for the worse.
You’ve likely heard of the term at some point and have a general idea of what it is, but it’s a subject worth exploring in greater detail. Learning more about powers of attorney now can save you and your loved ones from potentially nightmarish situations in the future.
We’ll devote much of this article to discussing durable power of attorney, but let’s start by first recapping what power of attorney is in the first place.
Understanding the Power of Attorney
Power of attorney is a topic we’ve discussed previously but in case you missed that, let’s take the time to learn more about this legal term.
As its name suggests, the power of attorney is a legal power that you give to a different person or persons that enables them to act on your behalf. Once you give someone power of attorney, they become your agent or attorney-in-fact while you assume the role of being their principal.
A legal document outlines the terms of the power of attorney you’re giving to another party. This document will indicate which actions a specific agent can perform on your behalf. Whoever you designate as your agent will likely be required to present the document every time you execute an action, according to the American Bar Association.
You often use a POA as a safeguard against potential accidents. They ensure that the decisions involving you or your estate will continue to follow your best interests, even if you can’t make them yourself.
Furthermore, POAs are also sought after because they are highly useful in business. Instead of you having to personally travel from one place to another to complete business deals and other transactions, your empowered agent can do that for you.
POAs also differ in terms of type.
First, you have what is known as a general power of attorney. An individual granted a general power of attorney can make all decisions for you if they are deemed eligible by the law.
In contrast, a limited power of attorney is more restrictive. Someone granted an LPOA can make decisions regarding one of your bank accounts, but not all of them. You can also specify the exact matters they can decide for you.
If you desire, you can also restrict a limited power of attorney by designating a period of effectiveness for it.
POAs also vary from one another in terms of their longevity. In many cases, a power of attorney will stop being effective if the principal is incapacitated. They regard the POA in that scenario as a non-durable power.
On the opposite side, you have what are known as durable powers of attorney.
Defining Durable Power of Attorney
The durable power of attorney can remain effective for a long period of time. That power will remain usable even if the principal has become incapacitated in some way.
DPOAs are essential for several reasons.
First, designating someone to be your attorney-in-fact with DPOA matters because it makes an otherwise difficult situation more manageable.
Imagine a scenario where you are incapacitated, thus leading to your finances effectively becoming inaccessible. If you didn’t give someone DPOA ahead of time, your loved ones will have a harder time getting your finances in order.
LegalZoom notes that your loved ones will likely need to go to court first and have you declared incompetent before they can start taking control of your finances. That’s a process that can take plenty of time and effort, and it can stress out your family members even more.
DPOA also matters because it gives you greater control over what kind of treatment you receive later in life. By giving DPOA to a trusted loved one, you can be sure that someone who has your best interests in mind makes the medical decisions for you.
What Are the Different Types of DPOAs?
There are two main types of DPOAs.
The first is known as a healthcare DPOA. The person or persons granted the DPOA are legally obligated to make medical decisions for the currently incapacitated principal.
A healthcare DPOA is relied upon whenever the principal is unable to make those medical decisions. Whoever you chose to hold the healthcare DPOA will also be the person who talks to the doctors and other medical professionals on your behalf.
You can indicate in your healthcare DPOA that you want to be admitted into an assisted living facility if you are ever incapacitated, and your agent will carry that out.
An important thing to note about a DPOA is that it’s not a living will. The attorney-in-fact you named in the DPOA document cannot make decisions regarding your end-of-life care because that’s what the living will is for. Your family members and your doctors will make that kind of decision together.
The other type of DPOA is known as a financial durable power of attorney. By giving someone financial DPOA, you authorize them to make decisions regarding your assets. They can control your different accounts, sign checks on your behalf, and handle other essential matters related to your finances.
You must be thorough when crafting the financial DPOA document so that the agent will know exactly how to use your assets.
To protect against your financial DPOA abusing their power, the law regards them as a fiduciary, according to the Takacs McGinnis Elder Care Law. This is an important thing to note because someone designated as a fiduciary is legally bound to act in your best interests.
If your financial agent starts to sign off on transactions that are not beneficial to you or in ways that go against what you have outlined in the DPOA document, the law can punish them following the laws in your area.
How Should You Approach Crafting Your DPOAs?
Naming someone to hold either your healthcare or financial DPOA is not a matter to be taken lightly. It’s one of the most important decisions of your life, and you must be sure that you’re handing the reins over to people who are responsible.
It’s obvious that you should pick the people who you trust the most as your agent or agents. There are no limitations placed on who you can name as your agent. You can name a family member, a friend, or even an acquaintance as your agent in the DPOA document.
That’s one part of the process.
Next, you need to craft the documents themselves.
You have the option here of combining your healthcare and financial directives into one document, but Investopedia advises against doing that. Your broker should only be concerned about your financial affairs while your doctors should only know about your medical status. The best way to keep those matters independent of one another is by creating separate DPOA documents.
Feel free to name the same agent so that decisions can be made faster.
When Will the Durable Power of Attorney Start to Take Effect?
You, as the principal, will determine when the durable power of attorney becomes usable.
One option is to have the DPOA take effect right away. This is a move worth considering if you want someone completing financial transactions for you.
Most healthcare DPOAs only become effective after you’ve become incapacitated.
When Will the Durable Power of Attorney Expire?
Though a DPOA will not expire even if the principal is incapacitated, there are still different ways it may be rendered ineffective.
Similar to other POAs, a durable power of attorney will expire as soon as the principal passes away. This applies to all kinds of POAs, by the way.
As the principal, you can also set a kind of limit on the effectiveness of the DPOA. If you indicated in the document that the DPOA will only last for a specific amount of time, then that will be honored.
The courts can also step in and invalidate a durable power of attorney. It’s unlikely that the court will decide to take a closer look at a DPOA document on its own. A third party must petition the court to strip power of attorney from a previously chosen agent.
If the court agrees with the third party and revokes power of attorney from the designated agent, the alternate agent will then take over the responsibilities. Sometimes, there may be no alternate agent named in the document. With no alternate agent, the court will name a legal guardian who will handle the principal’s affairs.
The durable power of attorney may also expire if the agent originally named is no longer capable of handling his/her tasks.
A DPOA can similarly expire if the previously named agent was the former spouse of the principal. You can cite the divorce as the reason the spouse should no longer serve as the agent.
Tips to Remember When Crafting a DPOA Document
Working on your DPOA document early on is a wise move. That will make it easier for you to identify the right candidates to name as agents. You should also write down more comprehensive guidelines for your agent or agents to follow.
To get started on crafting your DPOA document, you will first need to secure a template. You can find these templates online, but you should be careful about obtaining your document that way. Some templates may not be up to date regarding the laws in your state, and that can prove problematic down the line.
As much as possible, you should approach an attorney for assistance when creating your DPOA document.
Be as specific as you can when creating the document. Doing so will enable your agent or agents to execute your desired actions with greater ease.
Some states may require you to have the DPOA document notarized and/or filed. Check the laws in your state to ensure that the document is legally binding.
Some states will require you to record the creation of the DPOA document. Once again, refer to the laws in your area to find out what you need to do.
You should also make a habit out of regularly checking your DPOA document. Consult with your attorney from time to time and see if the information contained in the document is still to your liking.
Tips to Remember if You Are Executing a DPOA Document
As the person entrusted with a durable power of attorney, you need to keep certain things in mind to fulfill your obligations well.
The main thing to remember is to have the DPOA document on hand. You won’t be able to invoke the powers of the document without it being present. It also must be the certified copy that you bring along and not a photocopy.
Before affixing your signature to any document you’re filling out as the principal’s agent, you should take a moment to ask if there is any specific format you need to follow. You won’t be violating any rules if you fail to follow the right format, but they may not execute the orders until you sign correctly. Remember to indicate that you’re signing as the agent of the principal.
Carefully considering the terms of your durable power of attorney will help ensure that you receive proper medical attention even if your health declines. We at Lakeside Manor also specialize in providing the highest level of care to all the patients entrusted to us. Find out more about our services and facilities by contacting us today.