A Durable Power of Attorney (DPoA) is the document that is going to enable someone make decisions and take actions on your behalf, other than health care decisions and actions, if you are unable. It is a creature of state statute. Some states refer to it as a Financial Durable Power of Attorney to distinguish it from a Durable Power of Attorney for Health Care, but that title is misleading, as there are a great many important powers that can and should be put into a DPoA in addition to financial powers.
The person who creates the DPoA, is referred to as the “Principal.” Your agent under the DPoA is referred to as your “Agent” or your “Attorney-in-fact” (which is not the same thing as your attorney at law).
A remains in effect once the principal is deemed incompetent. On the other hand, a “springing” power of attorney is ineffective until the principal is judged incompetent, according to Fed Week’s recent article entitled, “‘Springing’ vs. ‘Durable’ Powers of Attorney.” Springing is like a Health Care Proxy in that it only comes into effect when you are incapacitated.
Some people prefer a springing power, so no one will be authorized to act on their behalf while they’re still capable.
A springing power might go into effect after two physicians have certified your loved one’s incapacity.
Nevertheless, some experienced estate planning attorneys prefer a full power of attorney rather than a springing power of attorney because if your loved one becomes incapacitated, the situation will be stressful enough.
You also don’t want hassles and waste time and energy at the bank or their brokerage firm. It may not be easy to establish the principal’s incompetency and put a springing power into effect.
In addition, some financial institutions are highly reluctant to accept powers of attorney unless their forms are used. These banks and credit unions may be concerned about the liability they might have if they allow transactions under a form that’s not valid. Furthermore, financial institutions and others will be loathe to honor it absent certifications from doctors at a minimum, and often a finding of incapacity from a court.
Therefore, you should make sure that your financial institutions will accept your power of attorney.
In addition, it’s probably better to have just one person authorized to exercise the power.
If two or more people are named, the financial institution may insist that they all sign off, even if one party is authorized to act alone.
You can see that using a joint power is more cumbersome.
Contact our team of experienced Framingham estate planning attorneys at the Special Needs Law Group of Massachusetts to help you draft an effective power attorney for your specific circumstances especially for families with disabilities.