Durable Power of Attorney

What is a durable power of attorney?

When to use a durable power of attorney

A power of attorney is a useful legal document that is used for the following situations:

• You want to give someone permission to act on your behalf
• You wish to appoint an agent to manage your financial, business, real estate, or other personal affairs
• You need an agent to have the power to act for you in case you become incapacitated or unable to speak for yourself

Durable Power of Attorney Guide

No matter what type of power of attorney you need, LegalNature's intuitive questionnaire makes it easy to give your agent decision-making authority over almost all of your affairs, and our power of attorney form gives you complete flexibility in tailoring the document to your specific needs. Below, you will find a detailed description of the main sections and key components of LegalNature's customizable power of attorney template in the order that they appear in the document. Note that some of these sections may be omitted from your document depending on how you answer the relevant questions. 

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Naming Your Agent

The person you appoint to handle your affairs might be called an “agent,” “proxy,” “representative,” "attorney in fact," or something else depending on the state you live in. By signing this document your agent is legally obligated to follow your written instructions and to always try to act according to your known wishes. Note that our living will form includes a healthcare power of attorney within it and also allows you to specify your preferences in the event that you lack mental capacity and can no longer speak for yourself.

The agent you appoint generally must be of legal age or older and should be someone that you trust completely. It is important to read your completed form thoroughly to ensure that you have met all requirements mandated by your state. For instance, some states prohibit you from naming your doctor or an employee of your health care provider as your representative. Most people opt to appoint a trusted friend or family member, such as an adult child.

Successor Agents

You will need to name alternate agents, called “successor agents,” in case your first choice is unable or unwilling to represent you when the time comes. For instance, your first choice may become ill, pass away, or simply no longer wish to act on your behalf.

In any case, appointing multiple alternate or successor agents in your durable POA is a smart way to ensure that someone you trust eventually becomes your agent. In your power of attorney, each agent and successor agent will be specifically identified by their names, addresses, and phone numbers to prevent any possible confusion over their identities.

Other Appointments

It is also recommended that you appoint a personal guardian. This person will be responsible for managing your personal affairs if you become incapacitated. Again, appointing someone that you know and trust is crucial for preventing a court-appointed guardian being assigned to you, since such guardians will not necessarily have your best interests in mind.

Period of Effectiveness

Here you will indicate when the durable POA will go into effect and the length of the agent’s authority.

For instance, you can choose to empower the agent to begin immediately or at a later date. When completing a durable POA, you can authorize this to occur when you become incapacitated or deceased. Here, “incapacitated” means whenever the principal is unable to comprehend and analyze his or her personal affairs in order to make competent decisions. This could result from either physical or mental impairment. Unlike a durable power of attorney, in a general power of attorney the agent’s authority normally does not continue after incapacitation or death.

You will also choose when the agent’s authority ends. This could be a specified end date, or you might choose to allow the agent to continue serving indefinitely until the principal decides to revoke the authority. Again, in a durable power of attorney, the agent will normally continue serving even after the principal’s incapacitation or death.

Indicating a specific end date is often appropriate when the principal will be traveling or otherwise unable to attend to their own personal affairs for a certain amount of time. For instance, military personnel often sign over powers of attorney to a spouse or trusted friend while deployed on duty. Note that if you are unsure as to the exact time frame needed, you can always extend or revoke the authority at any time down the road. This means that your best guess should suffice.

Agent as Fiduciary

Under a durable POA, the principal and agent are in a “fiduciary relationship.” This means that the agent, and any alternate agents thereafter, are always required to act in the principal’s best interest and that their relationship is one of the highest trust and confidence. An agent who acts outside of the fiduciary relationship may end up seeing their authority revoked, and possibly other legal consequences. This protection allows principals to rest easy knowing that the law will protect them if the agent abuses their authority.

General Authority to Act

The principal may choose to provide a blanket authority to the agent, allowing them to handle any matter on their behalf. In this case, your form will still provide an itemized list of powers. Banks, health care providers, and other organizations will sometimes only accept a power of attorney if it specifically states the power the agent is trying to exercise. If the principal does not provide total authority, you will then select from the following specific powers you wish to authorize:

• "Real property" authorizes the agent to purchase, sell, and otherwise handle the principal’s real estate matters. Real estate includes any property interest, such as homes, condos, undeveloped plots, and partial interests.
• "Tangible personal property" authorizes the agent to purchase, sell, and handle the principal’s items of physical personal property. Examples include jewelry, vehicles, furniture, art, and heirlooms.
• "Stocks and bonds" allow the agent to buy, sell, and manage stocks and bonds on the principal's behalf.
• "Commodities and options" grant the agent the authority to buy, sell, and manage commodities and options on the principal's behalf.
• "Banks and financial institutions" authorize the agent to deal with financial institutions and financial transactions on the principal's behalf. This may include opening and closing bank accounts; depositing and withdrawing funds; receiving and monitoring account statements; taking out loans to support other financial, business, or legal interests; and managing debit and credit cards.
• "Operation of entity or business" grants the agent the authority to buy, sell, manage, or terminate the principal's interest in businesses they own. Examples include hiring decisions, contractual dealings, legal strategy, investment strategy, public relations, and financial decisions.
• "Insurance and annuities" allow the agent to manage any of the principal’s insurance plans or annuities, including changing or ending them.
• "Estates, trusts, and other beneficial interests" enables the agent to handle the principal’s estate planning, trusts, and other beneficial interests. A “beneficial interest” is the right to profit, distribution, property, title, or other benefits on assets held within an estate, trust, or agreement (i.e. funds from trusts, wills, guardianships, escrow accounts, etc.).
• "Claims and litigation" allows the agent to act for the principal regarding legal disputes, including settling actions, submitting claims to dispute resolution, and paying or receiving a judgment.
• "Personal and family maintenance" allows the agent to ensure that the principal’s family maintains its standard of living by providing funds for living expenses, health care, and education.
• "Benefits from governmental programs and civil or military service" allows the agent to manage government benefits, such as government loans, tax savings, and pension plans.
• "Retirement plans" allows the agent to create, maintain, and alter the principal's interest in and benefits under any retirement plans, accounts, or portfolios.
• "Taxes" allows the agent to manage the principal’s taxes at the federal, state, or local level, including filing tax returns.
• "Gifts" allows the agent to give gifts to the principal’s desired beneficiaries out of the principal’s assets. For example, this could include trusts or savings accounts for the principal’s children.

Specific Acts Authorized

Here you will find less common powers you may want to authorize for specific situations. The following definitions will aid your understanding of these powers:

• "Right of survivorship" is a joint property right that allows a joint owner to receive the interest of another joint owner that passes away.
• "Beneficiaries" are any person or entity entitled to receive assets, profits, gifts, or another benefit. Beneficiaries usually receive such benefits from the principal, the principal’s estate, a trust, or an insurance policy.
• "Delegation" authorizes the agent to pass on all or part of their authorized powers to a third party.
• "Waiving the principal’s rights" means that the agent may formally give up a right that the principal has to a retirement plan, annuity, or other benefit. This sometimes happens, for instance, when the principal would have wanted a spouse or other beneficiary to receive the benefit under the circumstances.
• "Exercise fiduciary powers" allows the agent to perform any fiduciary duties that the principal may have. This might include acting as a trustee or a board member. Local state law may stipulate what fiduciary powers the agent can or cannot perform.
• "Disclaim property interests" grants the agent the power to give up the principal’s property interest.
• "Inter vivos trust" means a trust created during the principal’s life with the assets (usually) to be disbursed upon the principal’s death.
• "Pets" are often addressed in a durable power of attorney. Agents may have the authority to provide support for the principal’s pets, including making boarding arrangements, paying veterinary bills, and maintaining the pets’ standard of living from the principal's own finances.
• "Funeral and burial arrangements" allows the agent under a durable power of attorney the authority to make funeral, memorial, burial, or cremation arrangements after the principal passes away. This may include buying a cemetery plot, ordering cremation, and following instructions from another advance directive, separate document, or a health care agent or proxy, if one exists.
• "Gifts to agent" allows the agent to make limited monetary or property gifts from the principal's own finances to themselves. This gift must not exceed the annual federal gift tax exclusion amount provided by the Internal Revenue Service (IRS). Allowing this power can help ensure that the agent can maintain their standard of living, health care, and education. It does not grant the agent complete legal authority to use the principal's assets for whatever they want. It does allow the agent to give gifts to themselves under limited circumstances and only in accordance with the principal's expressed wishes.
• "Nominating a conservator" allows the agent under a durable power of attorney document to designate a conservator for the principal if the principal does not name one themselves and protective proceedings are initiated by the court when the principal becomes incapacitated. The agent may nominate themselves to be the principal's conservator. This power is normally recommended in order to guard against the possibility of a court-appointed conservator being assigned, who will not necessarily have the principal’s best interests in mind.
• "Other matters, alter ego, incidental powers" allows the agent all rights to act on the principal's behalf as if they are the principal's alter ego. This includes all matters that are not stated within the power of attorney, so long as it does not contravene the principal’s wishes.

Special Instructions

You also have the option of including any special wishes, terms, restrictions, or instructions. It is a good idea to include any general goals here, even if they have already been communicated to the agent orally.

Amplifying Powers

This section of the form specifies the agent’s rights to compensation for their effort. For instance, the agent may be paid monthly for their services from the principal's own finances. However, the agent will be required to itemize their costs and expenses, which must be reasonable.

Here, the principal also affirms that banks and other third parties may rely on the representations made by the agent without fear of reprisal.

Finally, this section states that the agent cannot be held responsible for any unintentional or negligent wrongdoing so long as they seek to act in the principal’s best interests or according to their wishes. This is essential for encouraging agents to accept their appointments.

Principal’s Signature

After the principal finishes reviewing the power of attorney, they may need to sign in the presence of witnesses according to their state’s rules as indicated in the form.

Notice to Person Accepting the Appointment as Attorney-in-Fact

This notice is attached to the form as a separate document and acknowledges that the agent understands their duties and responsibilities. The agent should carefully read the power of attorney and this notice prior to signing and accepting the nomination as agent. The agent is advised to find legal counsel if they have any questions or concerns.

Notary Acknowledgment

Although not always required in every state, it is recommended that you use a notary to witness the signing, which will help prove the authenticity of the power of attorney should it ever be disputed in court.

Statement of Witness

Here, the witnesses sign a statement affirming the principal's identity, that they signed the power of attorney in the witness’ presence, that they are of sound mind and memory, that the signature was not procured fraudulently, and that the witness or witnesses are not serving as agents (i.e. meaning that they are disinterested parties without any conflicts of interest).

Executing Your Document

Since banks and other institutions, such as health care providers, often require powers of attorney to be notarized, we recommend that you use a notary even if your state does not require it.