Making decisions can get increasingly difficult as you grow older. You may experience declines in working memory, slowness in thinking, or you might not be able to express your wishes due to health-related issues.
But a durable power of attorney can come in handy if you want to enable someone else to make decisions on your behalf regarding legal, financial, or health-related matters.
Read on as we’ll unpack everything you need to know about durable powers of attorney.
What is Durable Power of Attorney?
A power of attorney (POA) is an important estate planning document you can use to allow someone else to make financial, legal, or medical decisions for you. The person granting the power is called the principal. The person receiving the power to make decisions is known as the agent or attorney-in-fact.
With a durable power of attorney (DPOA), the agent can continue to make decisions for you even if you become mentally incapacitated, for example, if you develop dementia. A standard (non-durable) power of attorney ends if the principal becomes mentally incompetent.
In general, you can choose any adult to be your agent—as long as you trust that they have your best interest at heart. It can be a family member, attorney, or close friend.
How to Make a Power of Attorney Durable
You can make any power of attorney durable by explicitly stating in the POA document that the agent’s power continues past the principal’s incapacitation.
Here’s an example statement:
For example, when using a limited power of attorney to give an agent the ability to sell your house for you, making it durable by including the above statement in the document ensures the agent won’t lose that power if you become mentally incapacitated.
As with all powers of attorney, the principal must be mentally competent and of sound mind to create a valid durable power of attorney.
Similarly, only a principal of sound mind can revoke or revise a power of attorney. Otherwise, to override a power of attorney, the principal’s family or friends can try to prove abuse of power by the agent and pursue legal action.
Types of Durable Power of Attorneys
A durable power of attorney is used when you want the agent’s powers to survive your mental incapacitation. Although any type of power of attorney can be made durable, they’re most commonly used for decisions related to health care and finances.
You can create a durable power of attorney for health care and one for financial or general matters as well as grant general or limited powers to the attorney-in-fact.
>> MORE: How to Get Power of Attorney for an Elderly Parent or Loved One
Durable Power of Attorney for Health Care
A durable power of attorney for health care, more commonly known as medical power of attorney (MPOA), is a legal document that lets your agent make healthcare-related decisions for you if you are unable to.
A medical power of attorney is a type of advance directive. You appoint a health care agent and give them power to make decisions regarding your health care based on your goals and wishes. Generally, a medical power of attorney is durable by default as it outlines your medical decisions if you become too ill to express them.
You can also use a medical power of attorney to plan for any health-related issues, regardless of age. For example, in the event of high-risk surgery, your agent (also called a health care proxy) can respond to poor outcomes by deciding on actions like resuscitation, life support, and palliative care.
>> MORE: Living Will vs Power of Attorney for Health Care
Durable Power of Attorney for Finances
You can use a durable power of attorney for finances to give an agent the power to make legal and financial decisions for you even when you’re mentally incapacitated.
Because it gives the agent broad or “general” scope over the principal’s financial affairs and other assets (unless the principal sets limits or restrictions), this document is also known as a durable general power of attorney, durable financial power of attorney, or simply a durable power of attorney.
A durable financial POA is frequently used for long-term financial management, where old age might make it difficult for the principal to manage their trusts, estates, and other assets.
For example, suppose you end up in a coma one day. In that case, a trusted agent can continue to file tax returns, make insurance payments, or watch over your retirement accounts or other investments so that there are no problems later on.
A durable power of attorney (DPOA) is among the most important legal documents you should consider for your estate plan. It gives someone you appoint the authority to make decisions for you even if you’re no longer able to decide for yourself because you are mentally incompetent.
If you want to plan precisely for health care issues, use a medical power of attorney. You can use a durable financial power of attorney for legal decisions and financial transactions.
What kinds of decisions can my agent make?
Your agent can make different kinds of decisions on your behalf, depending on the powers granted by you. Some of the decisions relate to:
- financial matters (paying bills, handling tax returns, managing bank accounts, accessing safe deposit box)
- health care matters (medical treatment)
When making these decisions, your agent is expected to consider your wishes and act in your best interest.
When does a durable power of attorney expire?
A durable power of attorney expires when the principal dies. However, it can also expire if the agent resigns and no successor agent is listed on the legal document.