Durable Power of Attorney

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A durable power of attorney for finances, or financial power of attorney, gives someone the legal authority to manage your financial affairs. A durable power of attorney is generally straightforward and inexpensive to prepare and can be a very useful legal tool for you and your family. The term “durable” means that the power of attorney does not automatically terminate if you become incapacitated.

A durable power of attorney can be set up so that it becomes effective right away. Many spouses have active financial powers of attorney for each other. This gives each spouse the ability to manage the others’ financial affairs if something happens to one of them, or if one spouse is out of town or unable to act for any reason.

Another option is that the power of attorney does not become effective unless and until the person becomes incapacitated. This is called a “springing” power of attorney. This allows you to maintain control over your own affairs while you remain able to make your own decisions.

If you become incapacitated, and you do not have a durable power of attorney, your family will likely have to ask a court for authority to manage your financial affairs. A court proceeding can be costly and inconvenient.

A durable power of attorney gives another person, called your agent or attorney-in-fact, the legal authority to act on your behalf. You can give your agent broad power to handle your finances or limit their authority to a narrow range of actions. A durable power of attorney can provide your agent with the authority to do the following:

  • Use your assets to pay your living expenses and those of your family
  • Sell, purchase, finance, and otherwise maintain real estate and other property
  • Invest your money in stocks, bonds, mutual funds, and other investments
  • Manage your various accounts and handle transactions with banks and other financial institutions
  • Buy and sell insurance policies and annuities for you
  • File and pay your taxes
  • Operate your business
  • Hire an attorney to represent you in court
  • Collect social security, disability benefits, and other government benefits on your behalf

Your agent or attorney-in-fact is under a fiduciary duty to act in your best interests. This includes maintaining accurate records, keeping your property separate from his or hers, and avoiding conflicts of interest.

A durable power of attorney automatically ends at your death. You can also revoke a durable power of attorney at any time, as long as you are mentally competent. Other ways a power of attorney may end is through a divorce, if a court invalidates the document, or if no agent is available.