Property Management – Durable Power of Attorney

A durable power of attorney (DPA) is a non-judicial method of property management for a person who is incapacitated.  A DPA can be a substitute decision maker for many types of property decisions.  A power of attorney (POA) is a written authorization for one individual, executed by the person prior to becoming incapacitated.  A POA is terminated when the person is loses mental capacity.  Thus, current state laws will only permit power to continue to be valid once the person becomes incapacitated if the document is executed as durable.  For the document to be held durable the power to the individual must specifically state that the power is durable and the right of the individual given the power is not affected by the mentally incapacity of the person.  There are a few states that all power of attorney is durable and durable need not be stated.  However in all cases the death of the person will terminate the power of the individual to act on behalf of the person.

DPAs can be tailored to individual needs and circumstances.  The person can grant an individual to manage their property, spend their income, and basically delegate whatever power the person believes to be appropriate or necessary which may include general powers to make any and all decisions the principal could make.  A general power of attorney authorizes the holder of the power to undertake the broadest range of transactions on behalf of the person.  Some states provide for a more specific list that can be delegated to the agent.  However if the power of attorney is created with a particular transaction in mind, it is best to specify the scope of powers necessary to complete it since some types of powers are presumed not to exist unless specified.

To create a valid durable power of attorney a person must have sufficient mental capacity to delegate power to an individual.  The capacity required for executing power of attorney is similar to entering into a contract where the person must understand the nature of the document and the significance of signing it.  This document may be revoked by a competent person at any time by just notifying the individual they gave power to.  However, until the individual has knowledge of the revocation, the acts taken on behalf of the person are legally binding.

Normally unless otherwise stated a DPA will become effective when it is executed, thus it is capable for both people to have and exercise powers simultaneously.  However, this may not coincide with the intent of the person signing the DPA, especially if the reason for executing a DPA is to authorize power only during events of incapacity.  Furthermore, some people do not want to have the DPA effective immediately upon signing.  Thus, “springing” powers exist.  Most state statutes to allow the power of attorney to become effective upon incapacity – for it to spring into power.  The use of springing powers eliminate issues of overlapping authority, however it makes it more difficult to determine when the person is actually incapacitated.  Many people suffer from gradual declines of mental abilities, and others experience fluctuations where they may be capable during certain times of the day but deemed incapacitated during others.

 

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