Durable Power of Attorney: Benefits and Concerns
A Durable Power of Attorney is a legal instrument by which a person, as the principal, appoints another person to serve as his or her agent. A benefit the Durable Power of Attorney has is that it gives the agent authority to perform specific acts on behalf of the principal, such as the power to act in conducting the principal’s business, including signing papers, checks, title documents, contracts, handling bank accounts and other activities in the name of the person granting the power.
One of the biggest concerns people have when creating a Durable Power of Attorney is that the agent may not have the principal’s best interest at heart and may do something contrary to the principal’s wishes. One way to help protect against this is to choose an agent carefully and to pick someone that the principal trusts will carry out his or her best interests.
Additionally, most Durable Powers of Attorney are effective the date they are signed. One concern that can arise from this is that if the agent has the document in hand, he or she could immediately transact business on behalf of the principal without the principal’s knowledge. One way to alleviate this concern is by including “springing” language in the document that makes the Durable Power of Attorney valid only upon a specific occurrence, typically upon the incapacity of the principal. However, one major drawback to this is that financial institutions may want proof that the principal is currently incapacitated and may not rely on documentation that is only days old. One alternative to providing “springing” language is to allow the drafting attorney to hold onto the original Durable Power of Attorney and only release it to the agent upon the principal’s instruction or upon a showing that the principal is in fact incapacitated.