As the name implies, a power of attorney can be a very powerful legal document. Among the many decisions you need to make when you execute a power of attorney is whether or not to make the document a durable power of attorney. Before you can make that decision, you need to understand the basics of a power of attorney as well as what creating a durable power of attorney actually does.
The term “power of attorney” is a somewhat misleading term. A power of attorney has nothing to do with attorneys and technically conveys legal authority, not power. When you execute a power of attorney, you are the known as the “principal.” As the principal, you can authorize an agent to do a wide variety of things on your behalf. The extent of the authority you grant to your agent will depend on the type of power of attorney that you execute.
A general power of attorney grants your agent extremely wide ranging legal authority and should only be used after careful consideration. An agent who has your general power of attorney can do anything from clean out your bank account to sell your home.
A limited power of attorney is a document that grants your agent the authority to accomplish a specific task or that limits his or her authority to a specific area. You might give someone a limited power of attorney to facilitate the sale of your vehicle while you are away on a business trip, for instance.
Traditionally, a power of attorney terminates upon the death or incapacity of the principal. This, understandably, defeated the purpose of many powers of attorney since people often execute one as a way to give someone authority in the event they become incapacitated.
An individual, for example, might execute a general power of attorney appointing his or her spouse as the agent as a way to ensure that the spouse has the legal authority to access bank accounts, signs titles, and generally conduct business for the individual should the individual become incapacitated. Of course, if the power of attorney terminates upon incapacity, the purpose is defeated. For this reason, the durable power of attorney was created. “Durable” simple means that the authority granted to the agent survives your incapacity.
Just as you should take care before granting someone a general power of attorney, you should also think long and hard before granting a durable power of attorney. Be sure the agent is someone you trust completely because he or she will have the authority granted in the durable power of attorney at a time when you are unable to revoke the authority.
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