Durable Power of Attorney – A Powerful and Confusing Document


The durConfusionable power of attorney is probably the most important document in your estate plan and may also be the least understood. What is it and how does it work?

In a simple estate plan in Oregon, you generally have three documents: your will; your durable power of attorfiles-and-folders-clipartney for finances; and your advance health care directive. The will disposes of your property after you die. The advance healthcare directive dictates who will make decisions concerning your health care when you cannot and what decisions that individual can make.

The durable power of attorney designates an individual to act as your agent throughout your lifetime, unless revoked prior to your death, making financial decisions on your behalf.

“Even while I can still make decisions?”

Is the durable power of attorney effective while you can still make decisions on your own? Maybe. The answer depends on whether your power of attorney is springing or not. A springing power of attorney is only effective when you are incapacitated and unable to make financial decisions on your own behalf.

The more common type of power of attorney is effective immediately upon signing. I will typically use this type of power of attorney in husband and wife situations or where a parent wants a child to take immediate control over the parent’s finances.

“I thought you are my attorney?”

Generally, the first paragraph of your durable power of attorney appoints an individual as your agent or “attorney-in-fact”. I avoid the term “attorney-in-fact” because it confuses people – I am their attorney. The agent is the person that will be responsible for doing what you authorize that person to do in the document. In a general power of attorney this individual will have extensive power over your finances so naming a trustworthy individual as your agent is important.

“Why is my document called a General Durable Power of Attorney?”

A General Durable Power of Attorney grants your agent broad authority over your finances. You are not giving your agent limited authority. For example, when you buy a car from a dealer you will typically sign a limited power of attorney giving the dealer the authority to register you as owner of the vehicle with the DMV. The document that you sign does not give the dealer the authority to deal with any other aspects of the transaction or the ability to deal with anything else. It is limited.

A general power of attorney lists a number of items that your agent can handle. Typically, the authority is over most anything, including: accessing your bank accounts, paying your bills, selling your property, dealing with your retirement plan administrator, dealing with the government. As I tell people, whatever you can do, your agent can do.

“Who do I name as my agent?”

This question is difficult to answer. Who you appoint as your agent is a personal decision that requires you to have the utmost trust in the person you appoint. For couples, this usually means your significant other will be named as agent. Of course there are exceptions. The successor agent in these cases is the difficult decision.   If you have multiple children, your selection may be more difficult. Some people will name their oldest child as successor just because they don’t want to offend him or her.  Others choose a child based upon proximity.  Some people just choose their favorite kid!  Whoever you choose, you should choose the child that you trust the most with your financial decisions.

“I am dead; now what?”

When you die, your power of attorney dies. Your agent can no longer make decisions on your behalf. The power to pay your bills, sell your house, deal with life insurance companies, etc. stops. Frequently, I have children call me saying that their parent died and that they have a power of attorney. That no longer matters. Now the will steps in.

As you can see, a Durable Power of Attorney can be a powerful and important document.  It is important to make sure that your current estate planning includes a Durable Power of Attorney that accurately reflects your needs.  Contact us to ensure that your Durable Power of Attorney is right for you.


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