Have you ever thought about how many decisions you make every day? While you may be able to make these decisions today, this can change dramatically if you ever start experiencing physical or mental decline or become incapacitated. Unfortunately, incapacity can strike you at any time and at any age. A Durable Power of Attorney (DPOA) not only ensures the continuity of financial and legal affairs in the face of incapacity but also provides peace of mind to you and your family. Need help? Our attorney at Priority Law can help ensure your legal rights remain protected in the event of incapacity. With over 20 years of experience, we can help you plan for the unexpected to bring comfort and security to you and your loved ones. Call 978-935-2000 to book an appointment with one of our compassionate attorneys.
What Is Durable Power of Attorney?
A durable power of attorney (DPOA) is a document that enables one person (called “the principal”) to select another person (“the agent”) and delegate them the authority to manage their affairs and make decisions on their behalf. The distinguishing feature of a DPOA is its durability — it remains in effect even if the principal loses their mental or physical capacity or otherwise becomes unable to make informed decisions due to illness or injury. This durability ensures that the principal’s affairs can be managed without the need for court intervention, which can be both time-consuming and costly.
What is the Difference Between Durable and Regular Power of Attorney?
The primary difference between a durable power of attorney and a regular (or non-durable) power of attorney lies in their validity upon the principal’s incapacitation. A regular POA ceases to be effective the moment the principal is no longer mentally competent to make decisions. This limitation makes the regular POA less advantageous for long-term planning concerning incapacity.
In contrast, the DPOA is specifically designed to bridge this gap. It comes into play exactly when it’s most needed – at the onset of the principal’s incapacity. This feature makes the DPOA an critical component of a comprehensive estate plan as it ensures that the principal’s matters and decision-making processes will be maintained without interruption.
According to a survey by the American Association of Retired Persons, over half of American adults have a power of attorney. This includes both durable and regular POAs. If you are in the half of Americans that do not have a power of attorney, consider visiting with our compassionate and dedicated attorneys at Priority Law today.
Common Powers of a DPOA
A durable power of attorney can be as broad or as specific as the principal desires, covering a wide range of powers and responsibilities. Some of the most common powers include, but are not limited to:
- Financial management. This encompasses the day-to-day management of the principal’s finances, including paying bills, managing investments, and handling banking transactions.
- Real estate affairs. The agent may buy, sell, maintain, and manage real estate properties on behalf of the principal.
- Legal actions. The agent can represent the principal in court matters or litigation, negotiate and sign legal documents, and make decisions regarding legal actions.
- Health care decisions. While a durable power of attorney for healthcare is typically a separate document, some jurisdictions allow for healthcare decisions to be included within a broader DPOA document.
- Tax matters. The agent can prepare, sign, and file tax returns, as well as represent the principal in tax matters before the IRS.
Your DPOA should be tailored to fit your specific needs and circumstances, taking into account your personal, financial, and health considerations.
How to Set Up a Durable Power of Attorney?
Creating a DPOA typically often consists of the following six steps:
1. Put It in Writing
Putting the agreement in writing not only establishes a clear record of your intentions but also serves as the primary evidence of the powers you are delegating. In fact, having a DPOA in writing is a legal requirement in Massachusetts (Mass. Gen. Laws ch. 190B § 5-501). For a DPOA to be considered valid, it must clearly state that the power survives the principal’s incapacity. This means the document should explicitly mention that the agent’s power remains in effect if you become physically or mentally incapable of managing your own affairs.
2. Use the Proper Format
While the specifics can vary from state to state, using a format that complies with local laws is essential for ensuring the document’s validity. Many states provide statutory forms that can be used as a template. These forms often include the necessary legal language and sections to fill out, making them a reliable starting point. However, you should consider consulting with an estate planning attorney to customize your DPOA to your specific needs and ensure compliance with local legislation.
3. Delegate the Powers
One of the most critical sections of your durable power of attorney will detail the powers you are delegating. This can range from broad authority to manage all of your affairs to more limited powers, such as the ability to access your bank accounts or manage your real estate properties. Being specific about what your agent can and cannot do will help prevent abuse of the power and ensure that your affairs are managed according to your wishes.
4. Specify Durability
To make a power of attorney “durable,” you must include language specifying that the document remains in effect even if you become incapacitated. Without this crucial specification, the DPOA would automatically terminate should you become unable to make decisions for yourself. The wording might vary, but the intent must be clear – that the powers granted are meant to endure beyond your capacity to make decisions.
5. Notarize the Document
For a DPOA to be legally recognized, it generally needs to be notarized. A notary public will verify the identity of the signer, ensuring that you are indeed the person granting power to an agent and that you are signing the document voluntarily. Note: Massachusetts does not require DPOAs to be notarized, though doing so can add an extra layer of validity and is generally recommended as thorough practice.
6. File the POA
While not always required, filing your DPOA with the appropriate government office can be a prudent step. This is particularly relevant if the POA includes powers related to real estate, as many states require the document to be filed with the local land records office. Filing the DPOA ensures that it’s recognized by financial institutions and other entities and can be particularly helpful in preventing challenges to its validity.
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A DPOA can be a powerful planning tool for individuals of any age. Our experienced and dedicated estate planning attorneys at Priority Law can assist you in preparing your DPOA to ensure that your document is legal and valid. Call 978-935-2000 and book your appointment today.