Questions and Answers on Durable Power of Attorney
1. What is a durable
power of attorney?
A durable power of attorney is a legal document that gives powers to an agent to act on behalf of the person who signs the document, called the "principal." It is called "durable" because unlike non-durable powers of attorney it continues to be effective despite the mental incapacity of the principal.
An agent under a durable power of attorney
is called an "attorney-in-fact." The name does not
mean that the agent is necessarily a lawyer. The document
gives the attorney-in-fact the powers to make financial, business
and some personal decisions, on behalf of the principal. In
New York, unlike most states, a power of attorney may not
give medical decision-making power to the agent. New York
instead requires the use of a document called a heath care
2. Who can sign
a durable power of attorney?
Any adult who understands what he or she
is doing and who wishes to authorized another adult to act
as an agent, either temporarily or permanently, can sign a
durable power of attorney. The principal can also revoke a
durable power of attorney at any time by notifying the attorney-in-fact,
destroying the document, or doing other acts to show the intent
3. When does a
durable power of attorney become effective?
Durable powers of attorney become effective immediately upon the notarization of both the principal’s and agent’s signatures. For this reason many people retain the original documents themselves, leave them with their lawyer or other trusted advisor and provide for the agents to receive them only if necessary.
4. Are formalities requires
for signing a durable power of attorney?
A durable power of attorney requires a notarization for the signatures of principal and agent(s). An "acknowledgment" form, attesting to their identities, accompanies the notarization. The new Statutory Gifts rider (a separate addendum) by contrast requires notarization and two witnesses, to grant to agent the power to give gifts of over $500 for tax or Medicaid planning.
5. Can durable
powers of attorney be used out of state?
The usefulness of a durable power of attorney
out of state depends exclusively on the law and/or practice
of the second state. For those who have out of state assets,
it is preferable to have a local document available for an
agent's use in the other location.
6. What are the
advantages of a durable power of attorney?
A durable power of attorney enables the principal
to have his or her business and financial affairs protected
even if the principal becomes incapacitated or if it is inconvenient
to act alone. The broad range of powers which can be granted
to an agent permits them figuratively to "stand in the
shoes" of the principal for almost any action.
7. What are the
disadvantages of a durable power of attorney?
The signature on a broad durable power of
attorney exposes most or all of the principal’s assets to
the control of the agent. The document’s failures, when they
occur, are largely due to the misconduct of untrustworthy agents.
8. Are there limits
to the powers that can be delegated under a durable power of
Yes. The law prohibits some personal matters,
from delegation to an agent. For example, an agent may not
contract for a principal’s marriage, sign the principal's
will or vote on the behalf the principal. Few other functions are treated
as too personal to be delegated.
9. What is the
difference between a health care proxy and a durable power of
attorney for health care?
Durable powers of attorney for health care
are not recognized in New York where the health care proxy
is the document of choice. But the difference between the
two documents is largely the difference in name. Both documents
are designed to name an agent to make health care decisions,
although some durable powers of attorney for health care incorporate
medical wishes. New York decided not to use durable powers
of attorney for health care to avoid confusion between the
medical and financial documents.
10. What are common
misunderstandings about durable power of attorney?
A common misunderstanding is the belief that
signing a durable power of attorney eliminates the principal’s
power over his or her own assets. This is not the case. The
durable power of attorney document does not diminish the power
of the principal, it simply provides power to the agent to
act in addition to the principal. Furthermore, an agent's
power can’t be exercised until the agent has possession of
an original document
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