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Home » Incapacity Planning » When Is a Durable Power of Attorney the Best Option?

When Is a Durable Power of Attorney the Best Option?

August 9, 2016Incapacity Planning

Durable power of attorney

Like many people, you likely have at least a rudimentary idea of how a power of attorney works and what one is used for in the normal course of business and/or your personal life. Unfortunately, it is this very familiarity that often causes people to either execute a power of attorney when they shouldn’t, or to use the wrong type of power of attorney. For instance, you may have heard of a “durable power of attorney” before; however, do you know when a durable power of attorney should be used and when it is the best option available? The best way to ensure that you don’t sign any legal document when you shouldn’t, and to find out when a durable power of attorney is the right document for the job, is to consult with an experienced New Hampshire estate planning attorney. It may also help you though to learn a little more about the various types of power of attorney and when each type should be used.

What Is a Power of Attorney?

A power of attorney, or POA, is a very commonly used legal document. At its most basic, a POA is an agreement whereby the Principal (the person granting authority) grants authority to an Agent to act on behalf of the Principal in legal matters. The extent of the authority granted to an Agent by a Principal will depend on the type of POA the Principal executed.

General vs. Limited Power of Attorney

Powers of attorney are broadly divided into two categories – general and limited, or special, POAs. A general POA gives the Agent very broad authority to act on behalf of the Principal. Although state law imposes some limits on the authority granted in a general POA, an Agent with general POA authority has a great degree of power that allows him/her to do things such as buy or sell assets in the Principal’s name, enter into contracts in the Principal’s name, and withdraw funds from an account owned by the Principal. Given the extent of the power granted to an Agent under a general POA it is crucial that you think long and hard before executing a general POA.

A limited, or special, POA, as the name implies, only gives an Agent the specific authority enumerated in the POA agreement. You might, for example, need to be out of the country for a couple of weeks while you have a vehicle listed for sale. In the event someone wants to purchase the vehicle you might give a family member or close friend the limited power of attorney to act on your behalf in the sale of the vehicle. Parents with minor children also frequently give a caregiver a limited power of attorney in the event that the caregiver must consult to medical treatment on an emergency basis.

What Is a Durable Power of Attorney?

Traditionally, any power of attorney would automatically terminate upon the death or incapacity of the Principal. For many people though the entire reason they even considered executing a POA was because they wanted to give some someone the legal authority to protect them and their estate in the event of their own incapacity. As a result of this seeming disparity, the concept of the “durable” power of attorney was born. A “durable” POA is simply a POA that survives the incapacity of the Principal.

When Is a Durable Power of Attorney the Best Option?

Because of the various factors that must be considered when deciding which estate planning tool is the best choice, it is impossible to provide a clear rule of thumb; however, some additional information regarding durable powers of attorney might better prepare you to discuss your options with your estate planning attorney. Specifically, there are two estate planning objectives for which a durable POA is not the best option, including:

  • Incapacity planning – people often think that because a durable POA survives the incapacity of the Principal it makes it the perfect incapacity planning tool. While it can be used as such, a revocable living trust is usually a better choice. A revocable living trust works by allowing you to create the trust and appoint yourself as the Trustee of the trust. You then appoint the person you wish to take over control of your assets should you become incapacitated as the successor Trustee. Major assets are then transferred into the trust for you to manage as long as you are able to do so. You also include trust terms that allow the successor Trustee to take over for you in the event of your incapacity, allowing for a relatively quick and simple transition to the successor Trustee if you become incapacitated.
  • End of life treatment – the authority to make medical treatment decisions for someone who has a terminal condition is a power that should not be granted lightly. As such, it is one of the few limitations or exceptions placed on the authority granted under a durable power of attorney by state law, even if the POA is a general POA. In the State of New Hampshire, for example, the authority to make healthcare decisions for you is granted by using a specific type of POA called a “New Hampshire Power of Attorney for Health Care.”

Contact Us

If you have additional questions or concerns regarding a durable power of attorney, contact the experienced New Hampshire estate planning attorneys at DeBruyckere Law Offices by calling (603) 894-4141 or (978) 969-0331 to schedule an appointment.

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Daniel DeBruyckere
Daniel DeBruyckere
Attorney Daniel A. DeBruyckere has been practicing law in New Hampshire and Massachusetts since 1998, and has helped hundreds of clients with their estate planning and elder care issues. He is very well respected in the area of estate planning, probate, trust administration, elder law issues, and business planning.
Daniel DeBruyckere
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