What is a Durable Power of Attorney and How Does it Work?

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Often, an attorney is asked to create a Power of Attorney for a client when the client is ill or about to have surgery. This is a good idea, but we generally advise having a Power of Attorney before the stress of illness creates an urgent need. So what is a Power of Attorney, anyway? A Power of Attorney (POA) is a document that allows an individual or organization chosen by you to take administrative action for you  such as signing tax returns or legal documents;  and managing non-trust assets, such as retirement plan assets, government benefits, etc. for you if you are incapacitated and can't take action for yourself. A properly drafted Power of Attorney may avoid the need for a conservatorship if you are incapacitated.

The person creating the POA is known as the Principal. The person who is given the responsibility to act for the other is called the Agent.

A durable power of attorney means that the Agent's power will continue to be effective, even if the Principal loses mental capacity.

The POA may give the power immediately, or may state that the power will only arise if the Principal is incapacitated. If the power is given immediately, it is up to the Agent to determine when to exercise the power. If it is only given on incapacity, the Agent must get letters from two doctors stating the Principal no longer has the capacity to manage his or her financial affairs. This ensures that the Agent is acting on the Principal's wish of of the POA being enforced when he or she is incapacitated.

From the Author: Durable Power of Attorney