Durable Power of Attorney
A power of attorney is a written instrument in which, a person, referred to as the principal, appoints another person, the agent or attorney-in-fact, to act in place of or on behalf of the principal. Powers of Attorney and Advanced Health Care Directives are important components of a well drafted estate plan.
Typically, the durable power of attorney for financial management is used to provide for continuing management of assets in case of possible future incapacity.
The general Durable Power of Attorney is immediately effective unless you indicate otherwise. You may want your Durable Power of Attorney to take effect only upon your incapacity and you would thus indicate this in the document. This is called a 'springing' Power of Attorney as the authority of your agent 'springs' into being on the happening of an event, namely, your incapacity.
A durable power of attorney, must contain the words: "This power of attorney shall not be affected by subsequent incapacity of the principal" or "This power of attorney shall become effective upon the incapacity of the principal", or words showing a similar intent. If the power of attorney does not contain these words, it is non-durable and is terminated if the principal becomes incapacitated.
The power of attorney for financial management may be very general and grant the agent broad authority, or the principal may limit the agent's authority specifically in the instrument creating it. Your Power of Attorney may allow your agent to make your mortgage payments, collect money due to you and deposit it in your bank account, pay your bills, and even keeping your business running. These can be extremely powerful documents and great care should be exercised in their use.
It is very important that the powers contained in your Power of Attorney are coordinated closely with the provisions of your trust and other documents making up your estate plan. If you become incapacitated and you do not have a comprehensive estate plan which includes a Trust and Power of Attorney, a court proceeding may need to be initiated to appoint one or more people to act on your behalf as a guardian or conservator.