Despite the rapid rate at which our technology evolves, we cannot yet be in two places at once. At least, not physically. While digital identification processes have made it easier than ever to open bank accounts and even start trading from the comfort of your living room, there are many processes for which we require the full presence of a human being – or at the very least, an authorized representative. This is where a power of attorney comes into play.
Learn more below about a durable vs general power of attorney.
A power of attorney is a legal tool with which you (the principal) grant someone you trust (the agent) the authorization to act on your behalf. This person is also called the attorney-in-fact (as opposed to an attorney-in-law, for example).
The ability to act on your behalf may be as sweeping or as limited as you please. General powers of attorney refer to any document that gives a person the right to act on behalf of the principal – whereas a limited or special power of attorney provides a much narrower definition of what the attorney-in-fact is allowed to do under your authority.
Through a power of attorney, you can get someone to act on your behalf just to set up and complete the sale of your home, manage your property, or acquire a warehouse for your company in a different state. Other examples of what one might be able to do with a power of attorney include paying bills, handling insurance claims, filing tax returns, making donations, borrowing money, or making medical decisions on your behalf.
While a power of attorney can be broadly defined by the legal language in which it is written, most power of attorney documents are generally limited in power to the capacity of the principal – which means, if you are in a car accident and do not wake up for weeks, your agent loses their ability to represent you. The same goes for mental incapacity.
You can change this by deliberately wording your power of attorney in such a way that your agent retains the ability to act in your name, even during incapacity. This is called a durable power of attorney.
This is beneficial for anyone who wishes to place their financial and healthcare affairs in the hands of very specific individuals. For example, if you live with your partner of ten years and haven’t kept in touch with your parents, and find yourself comatose, your parents may have more say over your treatment than your unmarried partner, who might be better informed on what you might have wanted.
A durable power of attorney is a POA document that persists in incapacity. This is not to be mistaken for a springing power of attorney, which only becomes effective upon a later date or event, such as your incapacity.
Where a durable power of attorney is active from the moment it is created, until it is revoked later, a springing power of attorney written to activate upon incapacity only becomes active once your physician has provided proper proof and documentation of incapacity. This can take a while, undermining your chosen representative’s ability to represent you in the interim.
Both a springing and durable power of attorney are useful to enforce your wishes through trusted individuals that you know can represent you, both in business and in medical care. In both cases, your representatives also have a fiduciary duty to do what is in your best interest.
A general power of attorney differentiates itself from a durable power of attorney in that it is no longer valid upon your mental incapacity, in the same way any power of attorney loses effectiveness upon your death.
If you are uncomfortable with having a chosen representative make decisions for you while you are incapacitated, then a general power of attorney limits their ability to make decisions without you hearing about them.
You should still consider naming someone else, whom you trust with financial and/or healthcare decision making, as your attorney-in-fact through a durable power of attorney.
A durable power of attorney becomes useful the moment you feel someone other than your spouse or next of kin is best qualified to make medical decisions in your name, or the moment you feel the need to name someone specific to take over your financial responsibilities.
If you are an executive or handle responsibilities over the payroll and management of multiple employees, with no clear second-in-command, a durable power of attorney would ensure that a representative you’ve chosen goes on to make those important decisions while you are incapacitated.
Most people who create a durable power of attorney do not know when they might need it. But if you are aware, for example, if you have been diagnosed with a progressive illness, then a durable power of attorney and explicit instructions can help you prepare your family and your friends for your incapacity, and what you expect to happen afterward, as part of a robust estate plan.
A durable power of attorney for healthcare is different from an advance directive, or a living will. A living will is a document that describes your medical wishes to your physician, in the event of incapacity.
If you are someone diagnosed with a chronic illness, for example, you can use a living will to name procedures you explicitly veto or wish to try, should you become incapacitated, or you can make clear that you do or do not wish for extraordinary measures to be exercised during your end-of-life care.
If you have both a living will and a personal representative, and the two are at odds (though they shouldn’t be!), a physician will follow your wishes as per your directive. In general, however, the point of a combined directive (a living will and durable power of attorney, in unison) is to be clear on what you want, and how you wish to pass on in the event of incapacity.
There are many more estate planning tools that allow you to prepare for the worst. If you are setting up a durable power of attorney, consider working with your attorney to draft up other estate planning tools to manage your financial legacy, as well.
Founded in 1975 by L. Rob Werner and serving California for over 48 years, our dedicated attorneys are available for clients, friends, and family members to receive the legal help they need and deserve. You can trust in our experience and reputation to help navigate you through your unique legal matters.
Whether you need help creating a living trust or navigating probate, our living trust law firm's compassionate team of estate planning lawyers and probate lawyers are here to help you and ready to answer your questions.
Our goal is to make your case as easy as possible for you. Hiring a lawyer can be a daunting task, but it doesn’t have to be. From the moment you contact our firm, through the final resolution of your case, our goal is to make the process easy and understandable. We cannot change the fact that probate is a long and complicated process, but through our Werner Law Firm Difference, we strive to go out of our way to keep you informed of your case through every step of the way. We are constantly refining our processes and procedures for a more streamlined and calm client experience. Our goal is to have you feel like a burden was lifted from your shoulders, and that we made the whole process an easy one
If you're dealing with a legal matter, we urge you to schedule a free initial appointment today and join the many satisfied clients who have contacted Werner Law Firm.
23 Corporate Plaza Dr., Suite 150
Newport Beach, California 92660