10 Tips for Creating a Durable Power of Attorney

A durable power of attorney (DPOA) is a vital legal document that allows one person, the principal, to grant authority to another person, the agent, to make decisions on their behalf. Unlike a regular power of attorney, a durable power of attorney remains effective even if the principal becomes incapacitated. This makes it an essential tool in estate planning and ensuring that decisions about your healthcare, finances, and legal matters can continue to be managed if you are unable to do so yourself.

Creating a durable power of attorney requires careful thought and understanding. It is not simply a document that anyone can sign without the proper consideration. Below are 10 essential tips to guide you through the process of creating a durable power of attorney that will protect both you and your agent.

Understand the Importance of a Durable Power of Attorney

A durable power of attorney is an essential tool for anyone looking to ensure that their financial and healthcare decisions are handled properly in the event of incapacitation. It is often part of a comprehensive estate planning strategy, allowing for smooth transitions of power and authority if something unexpected happens to you. Unlike a regular power of attorney, a DPOA is not terminated by your incapacitation, which is why it's called "durable." This durability is what makes it so crucial for long-term planning.

It is important to recognize that without a durable power of attorney, decisions regarding your health care, finances, or other matters may need to be made by a court-appointed guardian or conservator, which can be time-consuming and costly. A DPOA prevents this potential problem and ensures that your wishes are respected.

Choose Your Agent Carefully

One of the most critical aspects of a durable power of attorney is selecting your agent. This is the person who will make decisions on your behalf, so it's vital to choose someone trustworthy, competent, and reliable. Your agent can be a spouse, adult child, close relative, friend, or even a professional such as an attorney or financial advisor.

Tips for Choosing Your Agent:

• Trust: Make sure that the person you choose has your best interests at heart and is trustworthy.
• Competence: Your agent should be capable of understanding the responsibilities and potential decisions they may need to make. If you're granting them financial power, they should have some understanding of financial matters.
• Availability: The agent must be someone who is willing and able to take on the responsibilities when the time comes.

Additionally, consider naming a successor agent in case your first choice is unable or unwilling to act when the time comes.

Define the Scope of Authority

When drafting a durable power of attorney, you need to clearly define the scope of authority that you are granting to your agent. This involves specifying which areas of your life the agent can make decisions about. The document can be tailored to provide broad or limited powers, depending on your needs and preferences.

Common Powers Granted:

• Financial Decisions: This includes managing bank accounts, paying bills, filing taxes, and overseeing investments.
• Healthcare Decisions: This can involve making medical decisions, deciding on long-term care options, and ensuring your healthcare wishes are followed.
• Real Estate Transactions: If you own property, you can grant your agent the ability to manage or sell it.
• Legal and Tax Matters: The agent can be empowered to handle legal proceedings, sign documents, and file necessary tax returns on your behalf.

Make sure that the powers granted align with what you need. For example, you may not want to give your agent the authority to make healthcare decisions if that's something you prefer to handle personally.

Clarify the Terms of Activation

A durable power of attorney can be set up to activate in different ways. The most common terms for activation are:

• Immediate Activation: The DPOA becomes effective as soon as it is signed. This is often used for financial matters where the principal may need assistance right away, even if they are not incapacitated.
• Springing Activation: The DPOA only becomes effective if you are deemed incapacitated by a doctor or another medical professional. This provides an extra layer of protection, ensuring that your agent cannot act unless necessary.

You should decide which activation method works best for you and ensure that it is clearly outlined in the document.

Incorporate Specific Health Care Instructions

A durable power of attorney can also be used to appoint someone to make healthcare decisions on your behalf. This is especially important if you want someone to ensure that your medical care aligns with your values and wishes in the event you cannot speak for yourself.

If you are creating a DPOA that includes healthcare decisions, it's essential to be specific about your preferences. Consider including:

• Living Will Provisions: Specify your wishes about end-of-life care, life-sustaining treatment, organ donation, and whether or not you want to be placed on life support.
• Healthcare Proxy: Appoint an agent who can make decisions regarding medical procedures, medications, and treatments if you are unable to do so.
• Do Not Resuscitate (DNR) Orders: If you have preferences regarding resuscitation in case of medical emergency, it's essential to include these directives in your DPOA.

This ensures that your healthcare wishes are honored and that your agent has clear guidelines to follow.

Consult an Attorney for Legal Advice

While creating a durable power of attorney may seem straightforward, the legalities can be complex, especially when it comes to ensuring that the document is valid in your state or jurisdiction. Many people choose to consult an attorney specializing in estate planning to ensure the DPOA is legally binding and meets all necessary requirements.

An attorney can help you:

• Draft the document to ensure it reflects your exact intentions.
• Address specific legal language to make sure your wishes are enforceable.
• Advise on tax implications or other concerns related to the powers granted to your agent.
• Ensure the document complies with state laws, as each state has its own requirements.

Understand the Risks and Protections

While a durable power of attorney is an essential tool, it comes with inherent risks. By granting someone authority to make decisions on your behalf, you are essentially putting a great deal of trust in that person. To mitigate risks, you can take a few precautions:

• Limit the Scope of Power: Be specific about what decisions your agent can and cannot make.
• Monitor the Actions of Your Agent: Consider requiring your agent to submit regular reports or accountings of their actions.
• Legal Safeguards: Some people choose to incorporate legal safeguards, such as requiring a third-party (e.g., a financial advisor) to review the agent's actions.

These precautions can help prevent abuse and ensure that your agent acts within the scope of their authority.

Review and Update Your DPOA Regularly

Once you've created your durable power of attorney, it's important to review it periodically to ensure that it still aligns with your wishes. Changes in your personal situation, health, or relationships may require modifications to the document.

Circumstances to Review Your DPOA:

• Change in Relationships: If your relationship with your agent changes or if they become unavailable, it may be time to appoint a new agent.
• Health Changes: If you develop new health issues or concerns, you might want to revisit the healthcare decisions you've outlined.
• Life Changes: Marriage, divorce, birth of children, or the acquisition of new assets may also require updates to the document.

Make it a habit to review your durable power of attorney every few years or after major life events.

Ensure Your Agent Understands Their Responsibilities

Once you've chosen your agent, it's essential to have a conversation with them about their responsibilities. Your agent should fully understand the powers they are being given and be prepared to act in your best interest.

Consider providing your agent with:

• A Copy of the Document: Make sure they have a signed copy of the DPOA so they know what authority they have.
• Instructions on How to Use It: Explain how to implement the DPOA in case they need it, including the process for healthcare decisions or financial management.
• Discussion of Your Wishes: Have a candid conversation about your preferences, especially concerning healthcare and financial matters.

By ensuring your agent is prepared, you can avoid confusion or misunderstandings when the DPOA needs to be activated.

Store the Document in a Safe Place

Finally, once your durable power of attorney is complete, store it in a secure yet accessible location. You should inform your agent and a few trusted family members or friends about the document's location so that it can be easily found when needed.

• Physical Storage: Keep the original document in a safe place, such as a safe deposit box, a fireproof safe, or with your attorney.
• Digital Copies: In addition to the original document, consider storing digital copies in a secure, encrypted location.

Ensure that your agent knows how to access the document when necessary, and periodically check to ensure the document is still valid and stored securely.

Creating a durable power of attorney is one of the most important steps you can take in ensuring your future wellbeing, particularly in cases of incapacity. By selecting the right agent, understanding the scope of authority, and periodically reviewing and updating the document, you can provide both yourself and your loved ones with peace of mind. This document is more than just a legal form; it is a cornerstone of thoughtful, proactive estate planning.

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