Durable Power of Attorney

Power(s)-of-attorney is the family of legal instruments that allow an individual or entity to appoint a person, professional, or organization to act as attorney-in-fact. That is an agent for legal, financial, or personal matters.

An adult, under no legal disabilities, is eligible to create a power-of-attorney; this adult is called the “Principal.” An adult person would create a power-of-attorney so that a person chosen by the adult will have the legal authority to perform the actions the adult wants performed, but may be unable for some reason to do so on their own.

Put another way; a principal can create a power-of-attorney so that the principal’s agent, also known as an attorney-in-fact may act the manner directed by the principal. The preceding appears straight forward until you consider the many different powers-of-attorney types and the many different types of powers.

USEFUL CONCEPTS:

The Principal: is the person creating the power-of-attorney. They can grant or revoke a standard set of powers - the principal grants one or all the standard set powers and those unique to themselves.

Attorney-in-fact: The person who acts as the principal’s agent. They are able only to exercise the powers granted by the principal and only for the benefit of the principal. An attorney-in-fact cannot legally use the power-of-attorney in any way that has not been specifically authorized by the principal.

Fiduciary duty: This is the highest standard of duty in civil law and an attorney-in-fact assumes this duty on assuming the office of agent. It requires the attorney-in-fact to place the needs and wellbeing of their principal before their own. It requires absolute honesty, loyalty, and dedication by the attorney-in-fact to the principal’s assigned mission.

Financial Powers of Attorney: These are for dealing with banking, taxes, investments, real estate, and many additional powers, but NOT FOR HEALTHCARE.

There are several types of Powers of Attorney:

General Power of Attorney (GPOA) – Allows your agent to do everything you can do legally, on your behalf.
“Durable,” in a power-of-attorney means that the power-of-attorney remains effective even if the principal become disabled, incapacitated, or incompetent rendering it durable.
General Durable Financial Power of Attorney (GDFPOA) authorizes the attorney-in-fact to act either immediately or only upon the occurrence of a particular event (this is called “springing.”) The GDPOA is typically effective until revoked or until the principal dies. However, the death of the principal and revocation happen simultaneously, terminating the agency and rendering the GDPOA ineffective.
Limited Power of Attorney – A power-of-attorney that is restricted in some manner. The restrictions often effect the scope of powers which are limited as to scope, or when it may be used, or in what specific circumstances it may be used.
Statutory Power of Attorney – A power-of -attorney formulated in the probate code, which contains a uniform set of powers; all or some of which may be granted, and additionally allows you to grant other powers to deal with your property.

Be very careful when creating a power-of-attorney. Depending on the type of power of attorney you sign, the attorney-in-fact can and may make significant financial decisions for you. Good faith reliance by third parties will protect them against claims by you and leave you pursuing your agent for any recovery.