What is a Durable Power of Attorney?

Couple reviewing legal documents

In this blog, we regularly urge readers to make sure they have durable powers of attorney as part of their estate plan. A durable power of attorney isn’t just something that’s nice to have; it is a critical part of your estate and incapacity planning. Powers of attorney are as important as having a will or trust, and arguably more so. Regardless of your age or the size of your estate, you can benefit from establishing durable powers of attorney—and every adult should have one. Read on to learn why, and how to establish a power of attorney.

Power of Attorney Terminology

Before we discuss why it is so important to establish a durable power of attorney, it may be helpful to define the terms we use when talking about powers of attorney.

  • Power of Attorney: A power of attorney (POA) is a legal document that gives one person the authority to act on behalf of another in financial, legal, or medical matters, depending on the terms of the document. A power of attorney may be broad, or limited to as little as a single issue, such as authority to conduct a specific transaction.

  • Principal: The principal is the person granting authority to someone to act on their behalf.

  • Agent: The agent is the person authorized to act on behalf of the principal. The agent is sometimes also referred to as the “attorney in fact,” or in the case of a healthcare POA, a “patient advocate.”

  • Financial POA: A financial POA authorizes the agent to make financial decisions and transactions for the principal.

  • Healthcare POA: A healthcare POA authorizes the agent to make medical decisions on behalf of the principal.

  • Incapacity: Incapacity means that a person has been determined to be unable to make reasoned decisions or understand the consequences of their actions in conducting their affairs. Incapacity is often due to dementia, but may be due to other ailments or injuries.

  • Springing: A springing POA does not confer authority on the agent until the occurrence of a certain triggering event, usually the incapacity of the principal. If the condition specified in the POA does not occur, the agent named in the document has no authority to act on the principal’s behalf.

  • Durable: A durable power of attorney is structured to remain in effect if the principal becomes incapacitated. A power of attorney may be both “springing” and “durable,” meaning that it takes effect, and remains effective, upon the principal’s incapacity.

Now that we’ve discussed the basic terminology around powers of attorney, let’s explore why it is so important to have durable powers of attorney as part of your estate and incapacity plan.

Why is it Important to Have Durable Powers of Attorney?

Who makes decisions on your behalf if you become incapacitated? You may think a spouse, parent, or adult child can act for you, but if you are an adult, they cannot do so without legal authority. They can get that legal authority in one of two ways: through durable powers of attorney that you have previously executed, or through living probate.

If you have established durable powers of attorney, your chosen agent has immediate authority to handle your important decisions and transactions as soon as you are determined to be incapacitated. In the case of a financial durable power of attorney, they can pay your bills, do your banking, collect money that is owed to you, and so on. With a healthcare durable power of attorney, they can make medical decisions on your behalf, including decisions about end-of-life care if needed.

However, if you have not made arrangements to give someone this authority, the court will need to do so, through the guardianship and conservatorship process, also called living probate. Living probate is not designed to prioritize your preferences; it’s the last resort to ensure that someone has the power to make decisions for you that you can no longer make. That person will control where you live, what medical care you receive, and what happens to your money. Worse still, the person the court appoints as your guardian and/or conservator may not be the person you would have chosen, and may not share or respect your values. You can avoid that outcome by establishing durable powers of attorney.

Durable powers of attorney are like insurance policies; you hope to never need them. But if they are in place, they provide you with protection and security in the event that you do.

How to Establish a Durable Power of Attorney

While it is important to have durable powers of attorney in place, it is equally important not to execute them without careful forethought and meticulous drafting. Through these documents, you are effectively granting another person control over your life when you are most vulnerable. If the documents do not have the necessary provisions in them, they do you no good at all and you end up in the probate court.

For that reason, it is essential to work with an experienced estate planning attorney to craft durable powers of attorney that fit your unique needs and do not convey authority that you do not intend. Your attorney will also ensure that your powers of attorney are durable, so that they are effective in helping you when you need it most.

To learn more about the importance of incapacity planning or how to incorporate durable powers of attorney into your estate plan, speak with an experienced incapacity planning attorney who understands the laws of your state. The knowledgeable estate planning attorneys at Barron, Rosenberg, Mayoras & Mayoras work with clients to establish clear, effective durable powers of attorney. Schedule a consultation today by calling (248) 213-9514 in Michigan or (941) 222-2199 in Florida to learn how we can assist you. You can also use our simple online contact form.