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Ten 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 proxy.

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 to revoke.

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 attorney?

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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