Power of attorney gives a trusted individual the right to make decisions and take actions on your behalf. A durable power of attorney is most often used by seniors to give another person the authority to act in their name in medical and legal matters, including those about property, taxes, business deals and real estate. It is also known as a continuing power of attorney because it will continue even if the principal; the person granting the authority, becomes mentally incapacitated or incompetent.
The documents drawing up a power of attorney (POA) can be particularly about the purposes and duration for which it is conferred. The agent is usually a trusted friend or close relative who can be relied upon to make decisions in the best interest of the principal when he or she can no longer do so. For seniors and their families, it’s best to plan and set up a durable power of attorney, especially for medical matters, well before it will be needed.
What Is a Durable Power of Attorney?
A durable power of attorney is also known as a continuing power of attorney and remains in effect even if the principal becomes mentally incapacitated and incapable of taking or communicating decisions. Different states have their power of attorney forms which state the conditions and duration of the POA,as well as the start date. These forms must be filled out completely and correctly for the POA to become effective.
What Is a Power of Attorney?
Power of Attorney gives a trusted individual the authority to act on your behalf. It can pertain to legal or medical matters or just be limited to a single task. The scope and duration of the POA can be specified in the document. The person delegating the authority is called the principal, and the individual who is given the authority is called the agent or attorney-in-fact.
Types of POA
There are two types of POA: medical and general. General Power of Attorney gives the agent the authority to act for the principal in financial and legal matters like property and real estate, business, taxes, lawsuits and in dealings with the government agencies such as applying for benefits.
Medical Power of Attorney typically gives the agent the authority to make decisions regarding medical matters and healthcare. It is sometimes named differently in different states and may be known as Health Care Proxy, Designation of Health Advocate, Designation of Healthcare Surrogate, etc.
Both types of POA can continue even if the principal becomes mentally incapacitated if the word “Durable” is added.
Defining the Scope of Power of Attorney
The scope of POA can be defined so that it is limited to a specified matter or duration. The limits are clearly specified in the document. A durable power of attorney remains effective even if the principal becomes mentally incompetent. The state of being mentally incompetent is defined as the inability of the principal to make an informed decision or of communicating such decisions. In fact, this is why seniors and their families should plan and set up durable POA well in advance of it becoming necessary.
Mental incapacitation can result from mental illness or physical injury which affects the functioning of the brain. This includes strokes, coma, paralysis, etc. For seniors, it may stem from the onset of diseases like Alzheimer’s and dementia. In general, certification from a medical doctor is required for a POA that springs from mental incompetency.
How Long Does Durable Power of Attorney Last?
The durable power of attorney comes into effect when the form is properly completed unless specified otherwise. Alternatively, a “springing” durable power of attorney springs from an event such as the mental incapacitation of the principal, which is specified in the document. Durable POA typically ends with the death of the principal unless an ending date is specified.
When Is a Durable Power of Attorney Used?
A durable power of attorney is typically used when seniors need someone else to make decisions and take actions on their behalf in medical and legal matters. This may be done in the event of a sickness or injury or just because the principal needs help with managing affairs such as medical care, bills, and legal matters. It continues if a senior cannot make informed decisions about these and other matters. For seniors and their families, it is usually best to plan and establish a durable POA well before it will be needed.
Durable POA may also be needed if an injury or illness makes it impossible for the senior to communicate such decisions. For example, a disease such as a stroke may make it physically impossible to speak or communicate by any other means, even if mental functions are unimpaired. Many seniors may just choose to delegate durable POA to a trusted individual because they need someone to act on their behalf in making decisions regarding medical care, managing social security, applying for benefits, paying bills, etc.
Seniors and their families should plan and prepare for a durable power of attorney, especially for medical matters. In case of an accident or injury, or the onset of Alzheimer’s or dementia, it will save time, money and trouble if a trusted family member or friend can step in and take over the decision about medical care and treatment. It’s best to be proactive rather than wait too long and risk a situation where the principal is no longer capable of making a decision about choosing an agent.
If a senior does become mentally incompetent due to injury or illness without establishing a durable POA, relatives will have to go to the courts to make decisions about their medical care and treatment. This can be expensive and time-consuming and distract their efforts at a time when the medical care of the individual should be the highest priority.
What Are the Advantages and Disadvantages of a Durable Power of Attorney?
Durable POA is a relatively easy way for seniors to get help in managing their affairs without the intervention of a court. Even if there is no serious medical condition or emergency, it can be helpful to have someone who can manage financial and legal matters for them. It’s important to have someone who can make decisions about medical treatment and long-term care if and when the need should arise.
On the other hand, there is great potential for fraud and abuse in this position of trust, and unfortunately, this does happen very frequently. One way to prevent against fraud and embezzlement is to specify the limits of the durable POA.
Durable POA allows your agent to help you make decisions about medical care and deal with financial matters like bank accounts, taxes, social security, insurance, property, etc. Your agent can deal with third parties like banks, credit card companies, and government agencies and programs like Medicare and social security on your behalf. They will have to provide a letter of attorney to establish this authority.
A durable power of attorney is a relatively easy way for seniors to manage their affairs without the intervention of a court. The terms and limits can be specified. Durable POA ends with the death of the principal, which means that the agent does not have any control over the estate unless that is specified elsewhere.
While there are many benefits for seniors in giving durable POA to someone they trust, there is always the risk that this trust may be abused. Fraud does happen, and it can be a way for an agent to embezzle funds and transfer property to themselves or others. They can even change the names of beneficiaries on life insurance policies and annuities to benefit themselves.
In some cases, an agent may not be acting from malicious intentions but still fail to carry out the wishes of the principal. As in all matters, mistakes can be made. If fraud is detected, by the principal or the heirs, the agent may be sued for the return of assets as well as damages.
Can Durable Power of Attorney Be Revoked?
A durable power of attorney can be revoked at any time by the principal provided he or she is of sound mind. A properly-drafted statement of revocation will have to be given to the agent as well as to any third parties with whom the agent has had dealings in that capacity. If the agent is a spouse, the durable POA is automatically revoked in case of divorce.
Durable POA is automatically revoked on the death of the principal, and the agent has no control over the estate unless specified elsewhere.
A durable power of attorney helps seniors by giving a trusted individual the authority to act on their behalf in medical and legal matters. It can be important in situations where the principal becomes mentally incompetent to make informed decisions due to injury or illness. Durable POA is a way for seniors and their families to manage their medical and legal affairs without the intervention of the courts.