ESTATE PLANNING TOOL FOR SENIORS: Durable Power of Attorney

An Article for PrimeLine

By Randall K. Barton, Former CEO, A/G Financial Solutions

A Durable Power of Attorney is a legal instrument that authorizes another person to act on your behalf. You, the “Principal,” nominate a person, the “Attorney-in-Fact,” to act on your behalf in certain situations.

Who Should Be Appointed as Attorney-in-Fact?

It is critical to appoint a trustworthy person as an attorney-in-fact. By law, the attorney-in-fact is obligated to act in the best interest of the principal and to avoid any self-dealing (acting in the selfish interest of the attorney-in-fact rather than in the best interest of the principal).

When Should a Power of Attorney Become Effective?

Depending upon the circumstances, you may want the Durable Power of Attorney to become effective now or later in the event you are unable to act for yourself upon written evidence of incompetence or disability by your regular attending physician.

Types of Powers of Attorney:

• General Power of Attorney

This type of Power of Attorney authorizes the attorney-in-fact to act on behalf of the principal in a broad range of transactions and affairs, such as spending your money, cashing checks, paying bills, withdrawing money from bank accounts, selling your property, entering into contracts on your behalf, pursuing insurance claims and legal actions, etc.

• Special Power of Attorney

The attorney-in-fact is authorized to act only in specific instances, such as selling or buying a car or house, handling specific business transactions, taking care of certain banking transactions, authorizing caregivers to sign for medical procedures for your children while you are out of town, etc.

• Power of Attorney for Health and Personal Care

This Power of Attorney is much like a Living Will; however, you authorize the attorney-in-fact to make health care decisions on the type of treatment, location of treatment, and the right to refuse life-prolonging treatment to keep you alive.

How Is a Power of Attorney Revoked?

The Power of Attorney may be revoked by the principal by giving notice (usually with a revocation form) to the person acting on their behalf. It is automatically terminated at the principal’s death.

Why Have a Power of Attorney?

If you do not have a Power of Attorney and become incapacitated, a court may need to appoint a person to handle your affairs through an adversarial hearing. This can be expensive, time-consuming, and stressful for the entire family. By having a Power of Attorney in place, you choose whom you want to act in your stead and can instruct him or her as to your wishes.