The Importance of a Durable Power of Attorney (DPOA)

A general power of attorney (POA) document becomes invalid if the principal becomes incapacitated or mentally incompetent. To ensure that someone can continue to make decisions on your behalf during such times, it is essential to have a durable power of attorney (DPOA). A durable power of attorney explicitly states that it remains in effect even if the principal is unable to make decisions independently.

In the context of a DPOA, the individual granting the authority is referred to as the principal, grantor, or donor, while the individual receiving the authority is called the agent or attorney-in-fact. For clarity, this discussion will use the terms principal and agent.

Benefits of a Durable Power of Attorney (DPOA)

Contrary to common belief, a spouse does not automatically have the authority to make financial decisions on behalf of their incapacitated partner. Without a DPOA, a court must appoint a guardian or conservator if the principal becomes incapacitated or mentally incompetent. This process can be both time-consuming and costly, and the principal has no control over who will be selected to manage their financial affairs. A comprehensive DPOA empowers the agent to make decisions regarding the principal’s property, finances, investments, bill payments, and document signings.

Additional Benefits of a DPOA

• Clarifies Intentions and Reduces Disputes: A properly drafted, signed, witnessed, and notarized DPOA serves as legal evidence of the principal’s intentions, significantly reducing the likelihood of disputes or challenges from others.
• Facilitates Communication with Agencies and Organizations: When the principal is incapacitated, a DPOA enables the agent to communicate with insurance companies, banks, and other service providers on the principal’s behalf. Without a DPOA, these entities may refuse to disclose information. Furthermore, the agent can apply for government benefits on behalf of the principal.
• Provides Immediate Access to Funds: A DPOA grants the agent immediate access to the principal’s funds and assets, ensuring that bills and other expenses can be paid promptly. Without a DPOA, family members would need to seek court permission to access these funds, causing potential delays.
• Encourages Family Discussions: Establishing a DPOA not only designates an agent but also facilitates discussions with family members about the principal’s wishes, thereby helping to minimize potential conflicts.

It is important to recognize that a DPOA is not solely for the elderly. Legal experts strongly recommend that all individuals over the age of 18 have a DPOA in place. For further information about a DPOA and other estate planning documents, it is advisable to consult with an FRC trained advisor.