Although every estate plan is as unique as the individual who creates the plan, there are some common documents that tend to be found in the average estate plan. A power of attorney is one of those. You probably have some idea what a power of attorney is and how one works; however, do you know what a “durable” power of attorney is, and do you need to include one in your estate plan? The Indianapolis estate planning attorneys at Frank & Kraft explain a “durable” power of attorney and discuss when you might want to use one.
What Is a Power of Attorney?
A power of attorney, or POA, is a legal document that allows you (referred to as the “Principal”) to grant another person (the “Agent”) the legal authority to act on your behalf. The type and extent of the legal authority you grant to an Agent depends on the type of POA you execute.
General vs. Limited Power of Attorney
A general POA grants your Agent almost unlimited power to act on your behalf. This means that your Agent may be able to do things such as withdraw funds from your financial accounts, sell property and assets owned by you, and even enter into contracts in your name while the POA is in effect. Because of the broad authority you grant to an Agent when you execute a general POA it is imperative that you think long and hard before doing so.
A limited POA only grants to your Agent the limited, and specific, authority enumerated in the POA. For example, you might grant an Agent the specific power of attorney to act on your behalf at an upcoming auction for a plot of land you hope to purchase because the auction is scheduled for a date when you will be out of the state. In addition, parents of minor children frequently make use of a limited POA to grant a caregiver the authority to consent to medical care for a child, should it be needed, during the limited period that the parents are away.
What Does It Mean to Make a Power of Attorney Durable?
Historically, a power of attorney automatically terminated upon the death or incapacity of the Principal. The problem with that was that for many people, the entire point of executing a POA was that they wanted a loved one to have the authority to act for them in the event of their incapacity. If, however, the POA automatically terminates upon the incapacity of the Principal, executing the POA will not fulfill that purpose. With that in mind, the concept of a durable power of attorney began to evolve. A “durable” POA is simply a power of attorney that survives the incapacity of the Principal.
While a Durable General Power of Attorney grants your Agent a considerable amount of legal authority to act on your behalf, it does not grant your Agent the authority to make medical or health care decisions on your behalf. For that, you need to execute a special type of document known as an advance directive. Given the potential authority and power given to an Agent when you execute a power of attorney of any kind, always consult with your estate planning attorney before doing so.
Contact Indianapolis Estate Planning Attorneys
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns regarding a durable Power of Attorney, contact the experienced Indianapolis estate planning attorneys at Frank & Kraft by calling (317) 684-1100 to schedule an appointment.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.
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