Did you know that a general power-of-attorney document is null and void if you become incapacitated or mentally incompetent? That’s right, when you’re unable to make your own decisions, a power of attorney document must include the term “durable” to show your intent and remain in effect.
As the person authorizing someone else to act on your behalf, you are known as the principal, grantor, or donor. The person receiving the durable power of attorney is called the agent or attorney-in-fact and can legally act on your behalf. For the purposes of this article, let’s stick with the terms: principal and agent.
Advantages Of A Durable Power Of Attorney (DPOA)
Believe it or not, your spouse does not have automatic authority over your financial decisions if you become mentally or physically incapacitated. Without a DPOA, a court must appoint a guardian or conservator if you, as the principal, become incapacitated or mentally incompetent. Court proceedings can become time-consuming and costly, plus you have no control over who will be chosen to handle your financial affairs. With a comprehensive, DPOA, you can direct your agent to make specific decisions about your property, finances, investments, paying your bills, and signing documents on your behalf.
“A DPOA also enables your agent to apply for government benefits on your behalf.”
Other Advantages Of A DPOA
- Prevents questions about your wishes and intent. A well-drafted DPOA, properly signed, witnessed, and notarized, provides legal evidence of your intentions and makes it difficult for others to challenge or dispute them.
- Enables your agent to talk to agencies and organizations on your behalf. When you’re incapacitated, a DPOA enables your agent to communicate with your insurance companies, banks, and other service providers. Without one, companies and organizations will not disclose or discuss your information. A DPOA also enables your agent to apply for government benefits on your behalf.
- Allows your agent immediate access to funds. When you’re incapacitated, there are still bills and other expenses that need to be paid promptly. A DPOA enables your agent to access your funds and other assets. Otherwise, your spouse or family members must go to court to seek permission.
- Provides an opportunity to discuss your intentions with family members. In addition to the person you choose as your agent, a DPOA opens discussions about your wishes and helps keep family conflict down to a minimum.
Remember – a DPOA is not just for old folks. In fact, legal experts advise that everyone over the age of 18 has one. For more information about a DPOA and other estate-planning documents, connect with an FRC® trained advisor.
