A Durable Power of Attorney is a very important document. This document allows you to appoint someone to act in your place during your lifetime, if/when you are unable to manage your own financial affairs.
The person that you appoint is commonly known as your Agent or your Attorney-in-Fact. You, as the creator, are the Principal.
The document is called Durable because the authority continues even though you may be deemed incapacitated or unable to take care of your own affairs. The Durable Power of Attorney expires immediately after you die.
A Durable Power of Attorney may be drafted as either “immediate” or “springing.” Most Durable Powers of Attorney take effect as soon as they are signed, even though they will not be used until and unless the Principal becomes incapacitated. The document can also be prepared so that it does not become effective until such incapacity occurs, and that is a Springing Power of Attorney.
The Durable Power of Attorney will provide your Agent authority to carry out a multitude of actions on your behalf. The Agent will be able to handle your real estate, bank accounts, sign your name on tax returns, enter into contracts, deal with investment accounts, and if properly drafted, deal with estate planning documents such as your living trust.
In California, the authority to act on your behalf must be included both in your Durable Power of Attorney and in your living trust.
Because the Durable Power of Attorney provides your Agent with so much authority, it is important that the person you name as your Agent be someone that you feel is trustworthy and someone whom you would feel comfortable handling your financial responsibilities.
There are many concerns that people have when they create a Durable Power of Attorney which may include: the person they appoint mismanages their assets; the fear that your rights may be taken away; the person that you select dies before you; or if you simply change your mind of who you want to be responsible?
These are all valid and common concerns. But what happens if you become incapacitated and you do not have a valid, well drafted, Durable Power of Attorney?
Without a Durable Power of Attorney, you may be faced with your family needing to request a very lengthy and expensive legal process called a conservatorship (or guardianship if under 18 years of age) so the court can appoint someone to manage the affairs of the incapacitated person.
Therefore, it is important for you to have a Durable Power of Attorney drafted by a law firm that has the education and expertise to prepare them.