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durable power of attorney

A power of attorney is a legal document that transfers control of some of your personal responsibilities to another person. There are a few basic types of power of attorney, one of which is a durable power of attorney. With a durable power of attorney, you immediately transfer the power, legally allowing the agent to start making decisions on your behalf right away. The agent’s decision-making power continues if the grantor becomes incapacitated. A durable power of attorney can be useful, but make sure you fully understand what you are doing before you sign one.

What Is a Durable Power of Attorney?

A durable power of attorney, sometimes referred to as a letter of attorney, is a legal document that a person signs to transfer control over some element of their life or property to another person. In the case of a durable power of attorney, the power is transferred immediately and continues to apply even if you become incapacitated. The person transferring the rights is the grantor. The person that the grantor chooses to pass these rights to is the agent or attorney-in-fact.

Some states consider all powers of attorney to be durable unless the document notes that it is not. In those states, the power of attorney remains valid even after a person is incapacitated unless otherwise directed. There are four instances in which durable power of attorney can be canceled. This includes if the grantor revokes it, if it has an expiration date, if the grantor dies or if the grantor becomes mentally incompetent.

Types of Durable Power of Attorney

durable power of attorney

There are a number of types of durable powers of attorney. These are generally sorted by the type of decision-making power you are giving to your agent. The types of durable powers of attorney you may end up using are as follows:

  • General power of attorney: This is a broad power of attorney granting a variety of rights to your agent. For instance, let’s say you are planning to go abroad for an entire year, but you have a real estate portfolio you need tended. You can use a durable power of attorney to grant power to a trusted associate who can make decisions for your portfolio on your behalf, including sales, purchases and leases. General power of attorney is often used for estate planning.
  • Special power of attorney: Also called limited power of attorney, this is when you want to grant only a specific power to your agent. This durable power of attorney could, for instance, focus only on investment decisions, including for your 401(k) or IRA. You’d maintain full control over all other aspects of your life but your agent could make investment decisions for you.
  • Healthcare power of attorney: This is arguably the type of power attorney in which durability is most important. Having a durable power of attorney is key to allowing someone to make medical decisions for you. This enables your agent to make medical decisions for you, including taking you off life support, if something were to happen. For this type of power of attorney you can also set up a combination of springing and durable power of attorney. This would allow you to have it take effect when you turn a certain age — 80, let’s say — but also have durability if you were to become incapacitated.

How to Create a Durable Power of Attorney

These are the steps to creating your own durable power of attorney:

  1. Figure out which type of durable power of attorney you need and pick your agent.
  2. Buy or download a copy of the form you need. The exact form will depend on the state you live in, but it is key to get the proper paperwork. If you want a lawyer to help you with your durable power of attorney, now is the time to find one.
  3. Fill out the form or direct your attorney to do so. This is where you’ll name your agent and explain exactly what powers you want to transfer to them.
  4. Sign the document. In some states you must notarize the document, formally record it with your county or file it with a court or government office.

Choosing an Agent

durable power of attorney

The most important decision for those making a power of attorney is choosing an agent. Despite the name, the person does not have to be an actual attorney, though they can be. The most important thing is that they are trustworthy and know your wishes.

For a healthcare durable power of attorney, it is especially important to pick someone you trust and with whom you have shared any preferences you have for end-of-life care. A spouse, child or trusted friend might be good choices for this situation. Being clear about your wishes is the best way to make it as easy as possible for your agent in the event they have to make decisions for you.

The Bottom Line

A durable power of attorney grants some of your personal powers and responsibilities to another person. It generally goes into effect immediately and remains in effect even after you become incapacitated. Many people use durable power of attorney for healthcare reasons. It allows the person you choose to transfer power to, called an agent, to make care decisions for you if you become incapacitated. Creating a power of attorney is fairly simple, but a lawyer can help.

Estate Planning Tips

  • As you make decisions about power of attorney and other estate planning matters, you may find it useful to talk to a professional. A financial advisor can help, and you can find one with SmartAsset’s free financial advisor matching service. You answer a few questions. We then match you with up to three advisors in your area, all free of disclosures and fully vetted. You talk to each advisor and make a decision about how you want to move forward.
  • As you’re thinking about healthcare power of attorney, it’s important to make sure you have the health insurance you’ll need. That way your agent won’t have to worry about insurance problems if they have to make decisions for you.

Photo credit: ©iStock.com/Creativeye99, ©iStock.com/DigitalGrill, ©iStock.com/DNY59

Ben Geier, CEPF® Ben Geier is an experienced financial writer currently serving as a retirement and investing expert at SmartAsset. His work has appeared on Fortune, Mic.com and CNNMoney. Ben is a graduate of Northwestern University and a part-time student at the City University of New York Graduate Center. He is a member of the Society for Advancing Business Editing and Writing. When he isn’t helping people understand their finances, Ben likes watching hockey, listening to music and experimenting in the kitchen. Originally from Alexandria, VA, he now lives in Brooklyn with his wife.
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