What Is a Durable Power of Attorney?

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

A Durable Power of Attorney is a legal document giving certain powers to another person to act as your attorney in fact or as your agent with regards to your assets. That is, it enables the person you appoint to make decisions about your assets and liabilities and to sign documents, contracts, agreements, leases, etc. for you. The power of attorney is used like a trust, except you’re not dead. So when does it take effect and for how long does it last?

When does it take effect?

It takes effect and it ends when you say it does. You define the time limits and other terms in the document. Usually we use these powers of attorney for asset management to protect the family in case the creator (you) becomes disabled or incapacitated. That means you are not able to take care of your financial affairs. It can also mean that the creator, perhaps your parent, is not able to resist “undue influence.”

This can happen when an elderly person can’t say “No” when someone asks them for money. Or a caregiver or someone else may find out that your parent has some savings and uses their position as a friend to influence your parent to give them money. This is financial elder abuse. It happens more often than we want to admit. The scary part is that the county agencies in California that were helping to protect seniors against elder abuse have all been cut back and have let go most of their staff.

You may also use a power of attorney if you just don’t want to handle your affairs and want to appoint someone else to do it. The document usually includes terms providing that you will get your powers back if you regain capacity. So if you are temporarily ill and someone has to pay your bills for you, you will take back your powers when you recover.

Sometimes you want the power of attorney to take effect immediately even if you’re not a senior or disabled, such as, when you travel out of the country a lot. One of our clients who travels to South East Asia on a regular basis gave a power of attorney to her brother with whom she owns rental property. That way if anything happens while she’s gone her brother can handle it and sign any necessary documents to maintain the property.

What is Incapacity?

The document includes a definition of incapacity which you can tailor to your own needs. The standard definition is:

(1) The person is unable to provide properly for that person's own needs for physical health, food, clothing, or shelter; to manage substantially that person's own financial resources; or to resist fraud or undue influence.
(2) A medical doctor or psychiatrist, not related by blood or marriage to any trustee or beneficiary, examines the person and declares under penalty of perjury that the person is temporarily or permanently incapacitated, according to medical definitions.
(3) The person already has a conservator who has been appointed by the court.
(4) The court makes a finding that the person is either temporarily or permanently disabled.
However, you can define it any way you want by removing any of these items or adding some of your own.

When Does It End?

The power of attorney can end on a specified date, when the person regains capacity or under any other circumstance you describe in the document. Estate planning documents are to protect you and your family. So you decide what you want to include.

For more information call the Law Offices of Patricia Rowe at 925-256-1000 or go to our website at www.PatriciaRowe.com and sign up for our monthly newsletter. Or you can ask questions here in the comment section or email your questions to prowe@patriciarowe.com.