Although every estate plan is uniquely tailored to fit the needs and goals of the individual creating the plan, there are some common tools that are found in the average estate plan. A Power of Attorney (POA) is one of those tools. If you are thinking about adding a Power of Attorney to your estate plan, you will need to decide which type of POA you need. You will also need to decide whether to make your POA durable or not. To help you decide, the Oklahoma City estate planning lawyers at Parman & Easterday explain what a Durable Power of Attorney is and why you might want to make your POA durable.
What Is a Power of Attorney?
A power of attorney, or POA, is a legal document that allows you (referred to as the “principal”) to grant another person (the “Agent”) the legal authority to act on your behalf. The type and extent of the legal authority you grant to an Agent depends on the type of POA you execute.
General vs. Limited Power of Attorney
A general POA grants your Agent almost unlimited power to act on your behalf. This means that your Agent may be able to do things such as withdraw funds from your financial accounts, sell property and assets owned by you, and even enter into contracts in your name while the POA is in effect. Because of the broad authority you grant to an Agent when you execute a general POA, it is imperative that you think long and hard before doing so.
A limited POA only grants to your Agent the limited, and specific, authority enumerated in the POA. For example, you might grant an Agent the specific power of attorney to act on your behalf if you are selling your vehicle but you have to be out of the state on business for a week. Parents of minor children also typically use a limited POA to grant a caregiver the authority to consent to medical care for a child, should it be needed, during the time the child is in the caregivers care.
What Does It Mean to Make a Power of Attorney Durable?
Whether it is general or limited, a traditional power of attorney automatically terminates upon the death or incapacity of the Principal. The problem with a traditional POA is that for many people, the entire point of executing a POA is that they want a loved one to have the authority to act for them in the event of their incapacity. If, however, the POA automatically terminates upon the incapacity of the Principal, executing the POA serves no purpose. With that dilemma in mind, the concept of a durable power of attorney evolved. A durable POA is one that survives the incapacity of the Principal.
If you are deciding whether to use a traditional power of attorney or a durable power of attorney you need to ask yourself one important question: “Do I want the Agent named in my power of attorney to be able to control my finances and/or make decisions on my behalf if I am incapacitated?” Obviously, you need to have the utmost faith and trust in an Agent to give someone that amount of power over you and/or your finances. As such, the decision to execute a durable power of attorney instead of a traditional power of attorney is not a decision that should be made lightly.
Before you execute any power of attorney it is in your best interest to have your estate planning attorney review the document to ensure that you understand what power you are conveying by executing the document. Likewise, if you need to convey specific authority to someone, make sure your estate planning attorney helps you draft a POA that will accomplish your goal to ensure that the document you execute does what you want it to do.
Contact Oklahoma City Estate Planning Lawyers
For additional information, please join us for an upcoming FREE seminar. If you have additional questions about which type of Power of Attorney is right for you, contact the experienced Oklahoma City estate planning lawyers at Parman & Easterday by calling 405-843-6100 to schedule your appointment today.
- What Happens to Assets When Creating a Trust? - February 27, 2017
- Are Living Wills Different from Regular Wills? - February 28, 2017
- Why Wills are Such a Common Estate Planning Tool? - March 1, 2017
