The Essential Guide to Durable Power of Attorney

What is a Durable Power of Attorney (DPOA)?

A Durable Power of Attorney (DPOA) ensures your financial and healthcare decisions are handled by a trusted individual if you become incapacitated. It is a legal instrument that can grant a trusted individual, known as an agent or attorney-in-fact, the authority to manage affairs should this happen to you.

This differs from a standard Power of Attorney, which becomes invalid if you lose mental capacity. A DPOA remains in-force during any period of incapacity, ensuring that your designated agent can act on your behalf. This trusted individual is usually a family member or close personal friend, a person who you trust to act in your best interest when needed.

The Importance of a Durable Power of Attorney

The DPOA is an essential estate planning document for several reasons:

• Continuity: Ensures your financial and healthcare decisions are made according to your wishes.
• Protection: Protects your assets and health by appointing a trusted decision-maker.
• Avoiding Court Intervention: Prevents the need for court-appointed conservators or guardians. If you become unable to handle your own affairs and have failed to have a DPOA created, it could become necessary to have someone appointed as your conservator or guardian. That is a lengthy and costly process that can only be done through your local court system; the DPOA avoids that process.

What Can a Durable Power of Attorney Do for You?

A DPOA can encompass a wide range of functions, including but not limited to:

• Financial Management: Handle banking, bills, investments, taxes, and dealing with property matters.
• Healthcare Decisions: Collaborate with medical professionals based on your healthcare preferences, which can be detailed in a separate living will.
• Legal Affairs: Sign legal documents and manage litigation on your behalf.

The Role of Durable Power of Attorney in Estate Planning

• Asset Management: It allows your agent to manage your assets in a way that aligns with your estate plan, ensuring that your wealth is preserved for your beneficiaries.
• Healthcare Directives: It works in conjunction with healthcare directives to provide a comprehensive plan for your medical care.
• Tax Planning: Your agent can make decisions that are tax-efficient, potentially saving your estate from unnecessary tax burdens.

Concerns and Considerations

There are many things to consider as you work through the process of creating your own Durable Power of Attorney. First and most important is the power you are placing in the hands of the person you select. This person can act as if they are you. That means they can make withdraws from bank or investment accounts, can sell property or can change legal documents. Obviously, it is important to think hard about who you should grant such authority to. This must be someone you fully trust.

• Selecting a Trusted Agent: Choose someone you fully trust, as they will have significant power.
• Multiple Agents: Consider naming a backup agent in case the primary is unavailable.
• Validity: A DPOA becomes invalid upon the grantor’s death; ensure you have a will or trust in place.

You should note that a Durable Power of Attorney becomes invalid upon the death of the grantor. At that point, the will or trust will be the instrument needed. In addition to selecting someone you trust; you must also consider having more than one individual selected. Consider the example of selecting a brother or sister as your trusted agent. If they are of a similar age, what kind of condition might they be in when you need their help. The DPOA will often have a back-up agent in addition to the first person named.

These are all things that can be discussed with an Estate Planning Attorney as part of the Estate Planning process.

A Durable Power of Attorney is a crucial part of any estate plan, providing peace of mind that your financial and healthcare decisions will be managed according to your wishes. By including a DPOA, you ensure your affairs are in trusted hands, even if you are unable to oversee them yourself. Life can be unpredictable, and planning for an unknown future is essential. That’s why it’s critical that you Don’t Leave Your Legacy to Chance.

Connect with a OneDigital Financial Advisor to optimize your approach and safeguard your future.

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