What is a Durable Power of Attorney?
A Durable Power of Attorney, also called a Financial Power of Attorney, is a legal document that allows you to designate another to make all your financial and business decisions. An “agent” is the person you designate to act as your power of attorney, also called “attorney-in-fact.”
You can use a Durable Power of Attorney if you are hospitalized, in a coma, or even just out of the country. A Durable Power of Attorney is not contingent on you being unable to handle the transactions yourself. If you have one or more businesses or private bank accounts, you may want someone to stand in for you to manage your affairs if you can’t.
Other FAQ about durable attorneys
Who should I choose as my agent?
The individual you designate as your power of attorney must be at least 18 years of age and competent to serve. It is essential to choose someone you trust implicitly to handle your affairs and someone who can make sound financial decisions for you.
It would be helpful if they are responsible, organized, and understand finances. Your agent should be comfortable talking with bankers, financial advisors, attorneys, and accountants. They must understand the serious commitment they are undertaking.
Choose your agent wisely. Since they can act on your behalf, your agent can bind you to the decisions they make. Any agent you designate has a fiduciary duty to act in your best interest. If they do otherwise, they may be civilly or criminally liable. For example, your agent may need help from an accountant while handling your money and taxes. It would be in your best interests if they hired an accountant. If, however, your agent uses your money to take a cruise, they are self-dealing and not acting in your best interest.
What if I don’t have someone who can act as my agent?
If you do not have anyone you can count on, there is still help. For a fee, a bank, lawyer, or accountant can serve as your agent. Some people don’t have anyone to name or some people choose to have a third-party act as their agent to avoid family disputes. One husband and wife with 5 adult children had their accountant serve as their agent. They felt that their accountant would best follow their instructions of how they wanted their affairs handled. Their kids were living in all different parts of the country, none living nearby. The couple thought it would be easier for everyone to have a neutral party involved.
What if I change my mind about my agent?
If at any time you wish to revoke a power of attorney, you must draft a Revocation of Power of Attorney. Give this document to your original agent. And also to any banks, financial institutions, etc. that may have your original power of attorney on file.
What else do you need to do to get your estate plan in order? Make an appointment with an estate planning attorney today.
Need more tips to jump start your estate planning? Get Estate Planning for the Sandwich Generation: How to Help Your Parents and Protect Your Kids today.
Very informative article. I didn’t realize, though it does make sense upon reflection, that you could name your accountant or lawyer (or anyone you like) as your DPA agent. Good to know. Thanks!