A Durable Power of Attorney is a vital document for anyone, but it is especially important for individuals engaging in estate and long-term care planning. Most people mistakenly assume that close family members (such as spouses or children) will have the authority to manage an individual’s assets when he or she is no longer able to do so. Without a Power of Attorney, this is simply not the case.
The Power of Attorney gives an agent (also known as attorney-in-fact) the authority to make financial decisions and manage property on behalf of a principal. You can designate more than one agent, and you can determine whether or not you would prefer them to act together, or have to ability to act separately. You can also designate a successor agent, so that there is someone who can fill in when your agent is unable or unwilling to act.
A Power of Attorney can be limited and only grant the agent authority over specific acts, or it can be a broad grant of a wide range of powers. A Power of Attorney that is durable allows the document to continue in full force once the principal loses mental capacity. It is essential that you execute a Durable Power of Attorney, so that your attorney-in-fact will not be left powerless if you have lost mental capacity.
Your attorney-in-fact can do many things, including pay your bills, manage your investments, sign financial documents on your behalf, and even transfer your money, if given the authority to do so. If you grant broad powers, your agent will be able to do anything that you can do with regards to your assets or property.
Because a Power of Attorney can give an individual complete control over all of your property, it is crucial that you choose a person who is right for the job. When choosing your agent, make sure he or she is a trusted individual who is responsible, dependable, and ethical. He or she does not have to be a lawyer or a financial expert, but should be someone who is competent to handle financial matters. It is important that you communicate to your agent how you wish your assets to be managed should you be unable to do so yourself. Also, make sure you fully disclose all of the property you own, and which financial institutions you hold accounts with, so that your agent has full knowledge of the extent of your assets. It is also imperative that the attorney-in-fact knows where the original signed power of attorney is being kept, since financial institutions often require an original document.
And remember: if you find that you are unhappy with the way your attorney-in-fact is handling your affairs, or change your mind for any reason, you can always revoke the Power of Attorney.