Durable Powers of Attorney are critical components of an effective estate plan. By signing a Durable Power of Attorney the client/principal delegates decision-making power to his or her agent/appointee/attorney in fact. This will usually eliminate the necessity of going to court to have a guardian or conservator appointed to take certain actions on behalf of the principal. The authority conferred under a Durable Power of Attorney is exercisable notwithstanding the principal’s subsequent disability or incapacity and, unless the power states a termination time, notwithstanding the lapse of time since the execution of the instrument.
After you’ve executed Durable Powers of Attorney, it’s important to review them periodically — at least every five years and preferably more frequently — and consider executing new ones.
Two types of Durable Powers of Attorney
A sound estate plan should include two types of Durable Powers of Attorney:
1. Financial power of attorney. Also referred to as a power of attorney for financial matters, this document appoints someone to make financial decisions or execute transactions on your behalf. Certain Durable Powers of Attorney become effective when they are signed and others, known as springing powers of attorney, only go into effect under certain circumstances. For example, a springing power of attorney might authorize your agent to handle your affairs while you’re out of the country or when you are determined through a specified procedure to be incapacitated. Normally we recommend durable powers of attorney that go into effect immediately so that there is not a necessity of having to prove that the principal is, in fact, incapacitated or disabled.
2. Health care power of attorney of Designations of Patient Advocate. This document, which also may go by other names, appoints someone to make medical decisions on your behalf in the event an illness or injury renders you unconscious or otherwise incapacitated and unable to make decisions for yourself.
Reasons to Review Your Durable Powers Of Attorney
Here are four reasons to review your Durable Powers of Attorney regularly:
1. Your thoughts about granting certain authority to an agent may have changed.
2. The agent(s) you designated to act on your behalf may have died or otherwise become unavailable. Or you may no longer trust the person(s) you chose.
3. If you designated your spouse as your agent and later divorced, you probably will want to designate someone else.
4. If you’ve since moved to another state, your durable powers of attorney may no longer work the way you intended. Certain terms have different meanings in different states, and states don’t all have the same procedural requirements. Some states, for example, require durable powers of attorney to be filed with the local county recorder or some other government agency.
Even if nothing has changed since you signed your durable powers of attorney, it’s a good idea to sign new documents every few years. Because of liability concerns, some financial institutions and healthcare providers may be reluctant to honor durable powers of attorney that are more than a few years old.
We’d be pleased to review your powers of attorney today and, if necessary, assist in executing new ones.