Why a durable power of attorney is a valuable estate planning tool
A Durable Power of Attorney (DPOA) allows an individual to give a designated person — known as an “attorney in fact” — authority to sign documents and act on their behalf. The legal document is particularly beneficial for individuals who are worried about mental or physical incapacity in the future. For example, an elderly person may be aware of their gradual memory loss, which may soon render them incapable of making important decisions.
Some people might view the idea of preparing and signing a DPA as a sign of losing their independence. However, it allows individuals to specify how they want things handled while they are still alive but unable to manage their affairs. Without a DPA in place, family and friends will not be able to make any important financial decisions in the event of unforeseen incapacity.
The attorney in fact has a significant amount of control over an incapacitated individual’s financial and legal affairs. They have the power to make decisions about assets, enter into contracts, manage businesses, and handle tax and trust matters. Therefore, it is critical to choose a trusted individual such as a family member or friend and to fully discuss the scope of responsibility.
The DPA can either be effective immediately once signed, or when and if a person becomes incapacitated. The document is legally valid for a person’s entire lifetime unless he or she revises or revokes it at any time while being of sound mind.
An experienced estate planning attorney can provide guidance on selecting the best approach to protecting one’s future interests. For example, in some cases a court-appointed conservatorship may be necessary when the individual lacks the capacity to sign a DPA or does not have anyone to name as an attorney in fact.
“We all want to avoid court involvement,” warns nationally known attorney Mark Gilfix. “Signing a well-drafted Durable Power of Attorney is therefore an essential part of proactive planning.”