Search Articles

Find Attorneys

Durable Power of Attorney: A Key Estate Planning Document

  • May 5th, 2023

Close-up of man signing contract.For most people, the durable power of attorney is the most important estate planning document available.

What Is a Power of Attorney?

When you have a power of attorney (POA) in place, you have appointed someone as your “attorney-in-fact” or “agent.” This appointee is someone you trust who is allowed to step in and act in your place when necessary.

For example, you may grant power of attorney to an agent to handle financial transactions on your behalf for when you are traveling. Or perhaps you are a business owner who would like a POA in place so that an agent can stand in your place to buy and sell assets. 

What Is a Durable Power of Attorney?

Were you to endure a debilitating injury, illness, or disability and become unable to manage your own affairs, having a durable power of attorney can be ideal. If your POA is durable, it means it will remain in effect even if you become incapacitated.

What If I Don't Have a Durable Power of Attorney?

Without a durable power of attorney (DPOA), no one can represent you unless a court appoints a conservator or guardian. That court process takes time, costs money, and the judge may not choose the person you would prefer. (Under a guardianship, your agent also may have to seek court permission to take planning steps. Under a simple durable power of attorney, they could have implemented such steps immediately.)

Other Types of Power of Attorney

A power of attorney may also be limited or general. A limited POA can give someone the right to sign a deed on your behalf when you are out of town. Similarly, it may allow someone to sign checks for you. A general POA is comprehensive and gives your attorney-in-fact all the powers and rights that you have yourself.

Local Elder Law Attorneys in Your City

Elder Law Attorney

Firm Name
City, State

Elder Law Attorney

Firm Name
City, State

Elder Law Attorney

Firm Name
City, State

A power of attorney may also be either current or "springing." Most powers of attorney take effect immediately upon their execution. However, the understanding is that the POA will not be used until and unless the grantor becomes incapacitated.

However, the document can also be written so that it does not become effective until such incapacity occurs. In such cases, it is essential to clearly define in the document the standard not only for determining incapacity, but also triggering the POA.

Do Banks Accept Durable Power of Attorney?

Getting banks or other financial institutions to recognize the authority of an agent under a DPOA can sometimes be challenging.

A certain amount of caution on the part of financial institutions is logical. Someone may step forward and claim to represent you, the account holder. However, the financial institution wants to verify that this person indeed has the authority to act on your behalf.

Still, some institutions go overboard, for example requiring that the attorney-in-fact indemnify them against any loss. Many banks or other financial institutions have their own standard power of attorney forms.

To avoid problems, you may want to execute such forms offered by the institutions with which you have accounts. Many attorneys counsel their clients to create living trusts in part to avoid this sort of problem with powers of attorney.

Other Considerations

While you should seriously consider executing a durable POA, you may not have someone you trust to appoint. Choosing an agent is a significant decision. You would be well advised to select someone who you believe will act in your best interest and whom you consider responsible and organized. (Note that you are not required to choose a family member as your agent; you may opt to appoint a professional, such as attorney or accountant.)

You may feel that it would be better to have the probate court monitor the person handling your affairs through a guardianship or conservatorship. In that case, you may execute a limited DPOA by nominating the person you want serving as your conservator or guardian. Most states require the court to respect your nomination "except for good cause or disqualification."

You may want to check out a booklet titled "Managing Someone Else's Money: Help for agents under a power of attorney." It is available for download PDF format from the federal Consumer Financial Protection Bureau.

Additional Resources

Learn more about the different types of power of attorney. You may also benefit from reviewing some of the following ElderLawAnswers articles and Q&As:

For further guidance, search for a qualified estate planning attorney near you.


Created date: 12/20/2012
Learn the secrets of estate planning from an expert
ADVERTISEMENT
Medicaid 101
What Medicaid Covers

In addition to nursing home care, Medicaid may cover home care and some care in an assisted living facility. Coverage in your state may depend on waivers of federal rules.

READ MORE
How to Qualify for Medicaid

To be eligible for Medicaid long-term care, recipients must have limited incomes and no more than $2,000 (in most states). Special rules apply for the home and other assets.

READ MORE
Medicaid’s Protections for Spouses

Spouses of Medicaid nursing home residents have special protections to keep them from becoming impoverished.

READ MORE
What Medicaid Covers

In addition to nursing home care, Medicaid may cover home care and some care in an assisted living facility. Coverage in your state may depend on waivers of federal rules.

READ MORE
How to Qualify for Medicaid

To be eligible for Medicaid long-term care, recipients must have limited incomes and no more than $2,000 (in most states). Special rules apply for the home and other assets.

READ MORE
Medicaid’s Protections for Spouses

Spouses of Medicaid nursing home residents have special protections to keep them from becoming impoverished.

READ MORE
Medicaid Planning Strategies

Careful planning for potentially devastating long-term care costs can help protect your estate, whether for your spouse or for your children.

READ MORE
Estate Recovery: Can Medicaid Take My House After I’m Gone?

If steps aren't taken to protect the Medicaid recipient's house from the state’s attempts to recover benefits paid, the house may need to be sold.

READ MORE
Help Qualifying and Paying for Medicaid, Or Avoiding Nursing Home Care

There are ways to handle excess income or assets and still qualify for Medicaid long-term care, and programs that deliver care at home rather than in a nursing home.

READ MORE
Are Adult Children Responsible for Their Parents’ Care?

Most states have laws on the books making adult children responsible if their parents can't afford to take care of themselves.

READ MORE
Applying for Medicaid

Applying for Medicaid is a highly technical and complex process, and bad advice can actually make it more difficult to qualify for benefits.

READ MORE
Alternatives to Medicaid

Medicare's coverage of nursing home care is quite limited. For those who can afford it and who can qualify for coverage, long-term care insurance is the best alternative to Medicaid.

READ MORE
ElderLaw 101
Estate Planning

Distinguish the key concepts in estate planning, including the will, the trust, probate, the power of attorney, and how to avoid estate taxes.

READ MORE
Grandchildren

Learn about grandparents’ visitation rights and how to avoid tax and public benefit issues when making gifts to grandchildren.

READ MORE
Guardianship/Conservatorship

Understand when and how a court appoints a guardian or conservator for an adult who becomes incapacitated, and how to avoid guardianship.

READ MORE
Health Care Decisions

We need to plan for the possibility that we will become unable to make our own medical decisions. This may take the form of a health care proxy, a medical directive, a living will, or a combination of these.

READ MORE
Estate Planning

Distinguish the key concepts in estate planning, including the will, the trust, probate, the power of attorney, and how to avoid estate taxes.

READ MORE
Grandchildren

Learn about grandparents’ visitation rights and how to avoid tax and public benefit issues when making gifts to grandchildren.

READ MORE
Guardianship/Conservatorship

Understand when and how a court appoints a guardian or conservator for an adult who becomes incapacitated, and how to avoid guardianship.

READ MORE
Health Care Decisions

We need to plan for the possibility that we will become unable to make our own medical decisions. This may take the form of a health care proxy, a medical directive, a living will, or a combination of these.

READ MORE
Long-Term Care Insurance

Understand the ins and outs of insurance to cover the high cost of nursing home care, including when to buy it, how much to buy, and which spouse should get the coverage.

READ MORE
Medicare

Learn who qualifies for Medicare, what the program covers, all about Medicare Advantage, and how to supplement Medicare’s coverage.

READ MORE
Retirement Planning

We explain the five phases of retirement planning, the difference between a 401(k) and an IRA, types of investments, asset diversification, the required minimum distribution rules, and more.

READ MORE
Senior Living

Find out how to choose a nursing home or assisted living facility, when to fight a discharge, the rights of nursing home residents, all about reverse mortgages, and more.

READ MORE
Social Security

Get a solid grounding in Social Security, including who is eligible, how to apply, spousal benefits, the taxation of benefits, how work affects payments, and SSDI and SSI.

READ MORE
Special Needs Planning

Learn how a special needs trust can preserve assets for a person with disabilities without jeopardizing Medicaid and SSI, and how to plan for when caregivers are gone.

READ MORE
Veterans Benefits

Explore benefits for older veterans, including the VA’s disability pension benefit, aid and attendance, and long-term care coverage for veterans and surviving spouses.

READ MORE