Question 1. What is a durable power of attorney?
A durable power of attorney is a document that allows capable adults the ability to choose a representative who will have the legal authority to make decisions on their behalf. Through your durable power of attorney you appoint an agent, also known as an attorney-in-fact, who receives this decision-making authority. The agent can make legally binding agreements as if you were making them yourself.
The durable power of attorney can be as limited or as broad as you like. In most situations people create a durable financial power of attorney. This document allows an agent to manage your financial affairs.
In other situations you might choose to create a general durable power of attorney. The general power is the broadest possible power you can convey, essentially allowing your agent to do anything you are legally entitled to do.
Question 2. Why is it called a “durable” power?
Durability is, in this sense, a legal term that has a specific definition. You can only make decisions while you are still mentally capable. If you become incapacitated or otherwise unable to make choices, any agent you appoint under a normal power of attorney also loses the ability to make choices for you.
However, through your durable power of attorney you can appoint an agent who will have the ability to act for you after you lose your ability to make decisions. “Durability” refers to your agent’s authority lasting after you have lost your ability to make decisions or revoke the power of attorney.
Durable powers of attorney are essential if you intend to create incapacity plan and appoint someone who will manage your affairs if you become injured, ill, or otherwise unable to act on your own.
Question 3. Who needs a durable power of attorney in California?
If you are a capable adult living in the state of California, you need a durable power of attorney. It’s that simple. Even if you don’t have a lot of property and don’t believe that you will lose your capacity any time soon, having a power of attorney in place is vital.
Let’s say, for example, that you are single person living on your own. You have some bills, a student loan payment, rent, and other responsibilities. What would happen to you if you were in an accident? Who would manage your finances and pay your bills on your behalf? Who would take care of your cat?
If you don’t have a durable financial power of attorney you don’t have a definitive answer to these questions. But, by creating this simple document, you can rest assured that your affairs will be managed by someone of your choosing in the event you lose your ability to manage them yourself.
- Living Trusts and Incapacity Planning - March 31, 2020
- Estate Planning and Charitable Giving — Key Points - March 29, 2020
- Over-Funding Your Retirement Plan: A Potential Estate Planning Problem - March 27, 2020