What is a Durable Power of Attorney?

March 7, 2015

A power of attorney is a document by which you (the “principal”) authorize a person (the “attorney-in-fact” or “agent”) to manage your assets and financial affairs during your lifetime.  A power of attorney is “durable” if the agent’s authority continues if you become incompetent.

Powers of attorney are used to avoid the need for conservatorship proceedings in the Probate Court if you become unable to manage your financial affairs yourself. The agent can do whatever the principal may do – withdraw funds from bank accounts, trade stock, pay bills, cash checks, sell real estate – unless the power is limited in the power of attorney.

Typically the agent’s authority to act is either immediate or springing.  An immediate power of attorney gives the agent authority to act which is effective immediately after you sign the document.  A “springing” power of attorney is only effective if or when you become incompetent. Most springing powers of attorney require one or more physicians to certify that you are incompetent.

It is crucial to name someone you trust completely as your agent.  The durable power of attorney creates a principal-agent relationship, which means that the agent still reports to you, so long as your are competent.  The power of attorney should describe what, if any, power your agent has to make gifts of your property.