What is a Durable Power of Attorney?
A Durable Power of Attorney (DPOA) is a critical legal document that allows you (the principal) to appoint a trusted person (your agent or attorney-in-fact) to act on your behalf if you become incapacitated due to dementia, illness, injury, or another condition. It is one of the most important and most overlooked oversights in any estate plan. Depending on how the document is drafted, a durable power of attorney may grant your agent authority over financial matters, health care decisions, or both. Importantly, to execute a valid power of attorney, you must have legal capacity at the time it is signed. Unfortunately, many people delay this essential estate planning step until they no longer have the legal ability to complete it—at which point it is too late.
What Happens if I don’t Have a Power of Attorney in Place?
If you experience a serious illness or sudden injury and lose the ability to manage your affairs, you will want someone you trust to have legal authority to act in your best interests. Without a Durable Power of Attorney, no one has the automatic legal authority to step in and act on your behalf. Instead, a family member or loved one may need to petition the court to be appointed as your guardian or conservator. This process can be costly, time-consuming, and stressful. Additionally, the court decides who will serve in that role, and the appointed individual may need ongoing court approval to take actions that could have been handled immediately under a Durable Power of Attorney.
Who Determines Legal Capacity and Signs a Power of Attorney?
The legal standard for capacity varies by jurisdiction. Some jurisdictions require only that the principal understands they are appointing someone they trust to manage their affairs. Other jurisdictions apply a higher standard, requiring the principal to have sufficient capacity to enter into contracts. An experienced estate planning attorney typically assesses capacity unless there is reason to question it, in which case additional safeguards may be required.
When Do I Need a Power of Attorney?
One of the biggest misconceptions is that Powers of Attorney are only for the elderly. In reality, unexpected illness and injury can happen at any age.
Work With an Estate Planning Attorney and Create a Power of Attorney
Because executing a Power of Attorney requires legal capacity and compliance with formal legal requirements, preparing these documents without the guidance of an attorney can be risky. An estate planning attorney can help ensure your documents are valid, effective, and tailored to your needs. In addition to Powers of Attorney, an estate planning attorney can prepare a Will, advise on beneficiary designations, develop strategies to preserve your assets, and provide ongoing guidance as your life circumstances change.
Call us today to schedule a free initial consultation, (605) 275-5665.