Durable Power of Attorney

What is a durable power of attorney for financial matters? A durable power of attorney for financial matters allows someone you choose (your agent) to manage your financial affairs if you become incapacitated. This includes paying bills, managing investments, filing taxes, and handling business matters. Without this document, your family may need to establish a costly conservatorship.

What does “durable” mean? The word “durable” means the power of attorney remains in effect even if you become mentally incapacitated. The powers you give to your agent will remain effective even though you are unable to give your agent instructions.

What’s the difference between a general and limited power of attorney? A general power of attorney gives your agent broad authority to handle all financial matters. A limited (or special) power of attorney restricts your agent’s authority to specific tasks or time periods. Most estate plans include a general durable power of attorney for comprehensive protection.

How much decision-making authority can I grant through a power of attorney? Generally, you can grant authority to make any or all of your legal or financial decisions (e.g., those related to banking, accounts, insurance, taxes, real estate, etc.). You can choose which powers you want to grant, with one significant exception. You cannot authorize your attorney-in-fact to make changes to your last will.

When does a power of attorney take effect? A “springing” power of attorney only becomes effective when you become incapacitated, as determined in the document. An “immediate” power of attorney takes effect when signed but allows you to retain control. Most attorneys recommend immediate powers with safeguards for practical reasons.

To whom can I grant the power of attorney? You can grant the power of attorney to any competent adult. However, you should be careful to select only someone you trust completely. You will be bound by the decisions he or she makes, and you should choose a person who can handle this responsibility.

Can I have multiple agents under my power of attorney? Yes. You can name multiple agents to act jointly (requiring agreement on all decisions) or severally (allowing any agent to act independently). You can also name successor agents who step in if your primary agent cannot serve.

What is the difference between an agent and an executor? An agent can make decisions for you only while you are alive. An executor can make decisions on behalf of your estate only after your death.

If I complete a durable power of attorney, do I still need a will? Yes. A durable power of attorney is valid only while you are alive. You still need a last will to explain how you want your estate to be managed and distributed after you die.

If I already have a living trust, why do I need a durable power of attorney? A living trust covers only items in the trust. A power of attorney can protect all of your property not held in trust by authorizing someone to manage your property if you are unable to for any reason. Without a power of attorney, a court may have to appoint someone for that purpose, causing delays and additional expenses.

Is a power of attorney a legal and valid document? Yes. A power of attorney is legal and valid in your state after you have completed a few simple steps, including signing the document and having it witnessed and/or having your signature notarized.

Can the person to whom I grant the power of attorney change my will? No. Even if you try to give your attorney-in-fact this power, he or she can’t change your will.

When does my durable power of attorney end? Your durable power of attorney ends automatically when you die. In California, your durable power of attorney will end automatically if you get a divorce and your ex-spouse was your agent.

How do I revoke a power of attorney? You can revoke a power of attorney at any time while you have mental capacity by creating a written revocation and providing notice to your agent, banks, and other relevant parties. Death automatically renders the power of attorney ineffective.

If I give someone a power of attorney, does that mean I don’t have control over my money anymore? No. When you give someone a power of attorney, you still have the right to control your money and property. However, you are giving your agent the ability to access your money. Your agent is not supposed to take or use your money without your permission, but there is a risk that a dishonest or unscrupulous agent might steal your money. It is therefore very important to choose an agent you trust. You should go over the agent’s duties before you sign your power of attorney.

Can the power of attorney be used by the agent to take my money or property without my permission? There is a risk that the agent you choose to give your power of attorney may abuse the power by taking or spending your money without your knowledge or permission. Because the agent can use the power of attorney to access your bank account and sell your property, do not give your power of attorney to anyone you do not trust with your money or property. It can be very difficult to get back money or property taken by the agent, because the agent usually has no money left to return. The agent may also sell your property, or mortgage it, reducing its value.