You Need a Durable Power of Attorney as Part of Your Estate Plan

It is important that each adult in the United States have four legal documents. One of these is a "durable power of attorney". The durable power of attorney is just a form agreement used as part of an individual’s estate planning.

When the individual has an accident, gets sick or otherwise goes down, the durable power of attorney allows someone else to take over management of the individual’s assets and business affairs. The individual making out the durable power of attorney is called the " principal", and the person who will take over for the principal is called the "agent".

A "durable" power of attorney is distinguished from a "general" power of attorney, because it has a provision in it that says that the powers of the agent will endure beyond the incompetency of the principal. A general power of attorney becomes ineffective if the principal is later determined to be incompetent. It was finally recognized that the time when a power of attorney was really needed was after the principal couldn’t function for himself or herself. Therefore, laws were written which made the power of attorney survive the principal’s incompetency.

The use of a will and revocable living trust may be better understood, but don’t dismiss the significance of a durable power of attorney. It is many times more likely that you will be incompetent or otherwise unable to manage your financial dealings next week than it is that you will be dead next week.

From a legal standpoint, it is almost harder to have a person declared incompetent and take over their financial life than it is to deal with a dead person’s assets.

Without the durable power of attorney, a family will have to have a court proceeding to have a family member declared incompetent and someone appointed as their agent or "conservator". An important part of the durable power of attorney is the mechanism that will be used to declare the principal incompetent.

If the durable power of attorney is written properly, the family can have the durable power of attorney take affect without any court intervention. If two medical specialists affirm that a person is incapable of managing their financial affairs, this will usually satisfy the requirements in most durable power of attorney forms. Sometimes a combination of clergy, trusted family members, or medical specialists can be used to verify a principal’s incompetency.

The durable power of attorney can give the agent broad powers to take care of the principal’s affairs. In addition to a principal’s financial matters, a durable power of attorney can give the agent authority to oversee the religious, social and medical concerns of the principal. A "medical power of attorney" only deals with medical issues. You can have a single document that includes the medical power of attorney, Health Insurance Portability and Accountability Act (HIPAA) agreement, and living will within your durable power of attorney, or you can keep them all as separate documents.

Every adult family member should have a durable power of attorney, regardless of the format chosen. Just execute the forms and keep them on file. A durable power of attorney can come to the forefront and save you time, money and aggravation at the time of a family or individual hardship.

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