DURABLE POWER OF ATTORNEY 

What would happen to your family if you or a member of your family became temporarily or permanently incapacitated or disabled as a result of a sudden illness or accident?  Would someone have the legal authority to make decisions on your behalf or would even the simplest matters such as paying bills and cashing checks become difficult, if not impossible, to accomplish?  One of the most important lifetime estate planning tools to prevent such problems from occurring is a durable power of attorney.  A durable power of attorney is a legal document that makes it possible for you to authorize someone else (the agent) to handle your business and/or financial affairs even if you are unable to do so yourself.

A durable power of attorney is so valuable because the alternatives are so grim.  In most situations, your family will be forced, at great time and expense, to go to court to appoint a guardian and conservator for you or the disabled family member.  Once a guardian and conservator are appointed, you are under the control of the court and will be required to file annual accountings and reports with the court, post a bond, and seek court approval to complete most transactions.  In short, it is a lot less expensive to pay for a durable power of attorney than to be faced with the legal expense and delays involved in the appointment of a guardian and conservator.

Once you realize the importance of a durable power of attorney, it is vital that you know what you are signing.  First, make sure you are signing a durable power of attorney.  Without the magical language in the document that says "this power will survive the disability or incapacity of the principal" or " this power of attorney will become effective upon the incapacity or disability of the principal," the power of attorney will not be durable.  Unless the power of attorney is durable, the power of attorney will terminate when the principal becomes disabled.

A durable power of attorney can either take effect when signed or at the time the principal becomes disabled.  A durable power of attorney that takes effect when the principal becomes disabled is called a springing power of attorney.  In other words, it "springs" into action when the principal becomes disabled.  Some people believe that the use of a springing power of attorney will help protect against an unscrupulous or overly aggressive person exercising the power of attorney before you intended.  However, not all states recognize a springing power of attorney, and since a spring power of attorney does not become effective until the principal is disabled, the agent must continuously prove that the principal is, in fact, disabled.  On the other hand, it is never necessary to prove if the principal is disabled if the durable power of attorney is effective when signed. 

Regardless of which form you choose, make sure you select an agent that you can trust.  In most situations, a husband and wife will select each other as their agents.  If a couple is in a second marriage, it is often a good idea to have one of the children serve along as one of the co-agents with the spouse so there is a built-in safeguard for each side of the family.  Every durable power of attorney should name one or two backup agents if the first agent is unable or unwilling to serve.  Often a married couple will choose one or two of their adult children to fill the backup position.  When you select an agent, make sure you choose someone you can trust and someone who has business experience or is familiar with your business transactions.  If your spouse and children do not have the necessary experience, do not be afraid to ask your parents, or to name a bank trust department as your agent.  Just remember, there is no formal supervision of your agent.

Once you have selected your agent, make sure you tell your agent where he or she can locate the document.  Although it is not necessary to give your agent the signed durable power of attorney, it is necessary to tell your agent where he or she can locate the signed original.  You will not do yourself or your agent any favors by locking all of your signed power of attorney documents in your safe deposit box.

Like all legal documents, a durable power of attorney is only as good as it is drafted.  For example, if you do not specify in your document that your agent is authorized to perform banking transactions on your behalf, the local bank will not authorize your agent to write checks or transfer money from your account.  If you do not authorize your agent to arrange a direct deposit of your Social Security check, the Social Security Administration will not allow your agent to do this for you.  The examples can go on and on, and that is why your durable power of attorney document must be detailed and comprehensive.  Once the principal becomes disabled, it is too late to go back and put the necessary language in the document.Remember, a durable power of attorney is not a substitute for a will.  A durable power of attorney immediately terminates once the agent has notice of the death of the principal.

In addition to signing a financial or business durable power of attorney, you should sign a health care durable power of attorney (called a medical durable power of attorney).  The purpose of a medical durable power of attorney is for you to appoint an agent to make health care decisions on your behalf if you are unable to communicate your decisions.  A few of the more common powers normally authorized in a medical durable power of attorney are to authorize your agent to consent or refuse to consent to surgery, change of physicians or hospitals, or release your medical records, donate your organs and admit you to a long-term care facility.  You may authorize your agent to make the decision to withdraw or continue medical treatment on your behalf, or you can provide in your document that your agent cannot override any existing health care directive that you have signed that specifies the circumstances in which you want medical treatment provided or withdrawn.  The decision is yours to make, but without prior planning, your wishes may never be heard.