As an attorney, I’m used to people asking me questions with complicated answers. Life isn’t always neat and tidy, and the law isn’t always (ever?) cut and dried. But this is an easy topic to write about, because the answer to the question, “Who needs a Durable Power of Attorney?” is truly simple: Everyone!
A Durable Power of Attorney is a legal document that authorizes someone else, called your Agent, the power to act on your behalf. A well-implemented estate plan will have two such documents: one that authorizes your agent to act for you with respect to finances and property, the other to act for you with respect to health care decisions. In California your Durable Power of Attorney for Health Care is part of your Advance Health Care Directive, which names your health care agent and states your wishes for end-of-life care.
Think about it: all of us can get sick unexpectedly, or injured in a random and surprising way. All of us may face a few weeks or months during which we aren’t able to get to the bank, pay our bills, or otherwise manage finances. Any of us could face surgery that leaves us unable to communicate for some period of time. Medical privacy laws make it illegal for doctors to release confidential health care information, even to spouses and children, without your prior consent. Financial institutions will not allow you to get information, let alone act on someone’s behalf, unless they know you’ve been authorized to do so, and are not out to defraud one of their clients. That’s why Durable Powers of Attorney exist–because without them, getting sick would mean being stuck without any way to get the help we need.
Both kinds of Durable Powers of Attorney remain legally valid after you’ve become unable to manage your own affairs. That’s what the word “Durable” means in the title–ordinarily someone who is not able to manage their own affairs can no longer legally make a binding contract, but special legislation makes these documents valid even then–which makes sense, since that’s when you need your Agent to be able to act for you by paying bills, taking care of your property, authorizing medical treatments and procedures, and, possibly, helping you move to an assisted living center or nursing home.
Both kinds of Durable Powers of Attorney can become effective the moment you sign them, or state that your Agent may only act on your behalf after you’ve become incapacitated. Which one should you choose? If you are elderly or travel a lot, and would like your Agent to act for you sometimes, even though you are actually still capable of managing things, or face health challenges and would like to have your Agents able to assist you in medical planning and decisions, Powers of Attorney that are immediately effective make sense.
If, however, you are young and healthy, or you prize your autonomy and do not want to allow anyone access to your finances or health care decisions now, a “Springing” Power of Attorney is for you. With a Springing Durable Power of Attorney, your Agent may only act for you after your incapacity is established — usually by a written statement by two physicians that you are incapable of managing your own affairs.
If you are in the process of estate planning, both of these documents should be part of your plan.
Finally, even if you’ve executed Durable Powers of Attorney in the past, consider updating them on a regular basis. We’ve found that banks and insurance companies sometimes insist that Durable Powers of Attorney be signed within the last five years to be valid. While this isn’t true under state law, they have internal policies and procedures that make it true for them.
