Power of Attorney: General vs. Durable
A Power of Attorney, or POA, is a legal document that allows you (the “principal”) to give someone else (your “agent”) the authority to make decisions on your behalf. You might want to do this if you’re planning to travel, or simply want someone you trust to handle things if you become unable to do so yourself.
But not all POAs are created equal. The key difference between a general and a durable power of attorney is what happens if you become incapacitated. Does the document remain in effect, or does it end?
This article will explore the differences between a general and a durable power of attorney, and help you decide which type is right for your situation.
What is a Power of Attorney?
A Power of Attorney, or POA, is a legal document that gives someone else the power to act on your behalf. The person who grants this power is called the “principal,” and the person who receives it is called the “agent” or “attorney-in-fact”—though they don’t have to be a lawyer.
A POA can give your agent the power to make decisions about your finances, property, and healthcare. You can customize exactly what your agent is allowed to do. For example, you might only want them to manage your bank accounts, or you might want them to make all your medical decisions if you can’t.
Keep in mind that POA laws vary by state. For instance, in North Carolina, POAs are governed by Chapter 32C of the state’s General Statutes.
General Power of Attorney (POA)
A general power of attorney is a legal document that grants broad authority to someone you trust (your agent) to act on your behalf. This can include a wide range of powers, such as managing your finances, paying your bills, or making investment decisions.
Think of it as giving someone the ability to step into your shoes and handle various aspects of your life, particularly your financial life.
Limitations of a General POA
The key limitation of a general POA is that it automatically terminates if you become incapacitated. This means that if you’re no longer able to make decisions for yourself due to illness or injury, the general POA is no longer valid.
A general POA might be perfectly suitable if your needs are limited to a time when you’re still capable of making your own decisions. However, it won’t help you plan for a future where you might not be able to manage your own affairs.
Durable Power of Attorney (POA)
A durable power of attorney is a legal document that allows you to appoint someone to act on your behalf, even if you become incapacitated. This is its defining feature.
To make sure your power of attorney is considered “durable,” you’ll need to use very specific language in the document, especially regarding the continuation of powers if you become incapacitated.
Benefits of a Durable POA
A durable POA ensures that your affairs will continue to be managed even if you can’t manage them yourself. A durable POA gives your chosen representative the power to act even during times of your incapacity, and it can be tailored to your specific needs.
For example, you can create a durable POA that covers your finances or your medical care, or both.
Durable vs. General Power of Attorney: What’s the difference?
The key difference between a durable power of attorney and a general power of attorney boils down to this: what happens if you become incapacitated?
A general power of attorney gives someone the authority to act on your behalf, but that authority ends if you become unable to make decisions for yourself. This makes it useful for handling specific situations when you’re available and competent.
A durable power of attorney, on the other hand, continues to give your agent authority even if you become incapacitated. This provides ongoing protection, ensuring someone you trust can manage your affairs if you’re no longer able to.
Choosing the right type depends on whether you want someone to have the power to make decisions for you, even if you can’t.
Types of Durable Power of Attorney
There are several types of durable power of attorney, each designed for a specific purpose:
Financial Power of Attorney
A financial power of attorney allows your agent to manage your financial matters, such as banking, investments, and taxes. This can be helpful if you become incapacitated and can’t handle these responsibilities yourself.
Medical Power of Attorney (or Healthcare Proxy)
A medical power of attorney, also known as a healthcare proxy, grants your agent the authority to make healthcare decisions on your behalf. It’s essential to have clear communication with your agent to ensure they understand your wishes regarding medical treatment. This is especially important if you have strong beliefs about end-of-life care.
Real Estate Power of Attorney
This type of POA gives your agent the power to manage real estate transactions, such as buying, selling, or managing property.
Limited or Special POA
A limited or special POA grants your agent the authority to act on your behalf for very specific tasks. For example, you might grant someone the power to sell a particular piece of property or manage a specific bank account.
Choosing the right type of power of attorney
When deciding between a general and durable power of attorney, think about your specific needs and situation.
- If you want your agent to act on your behalf if you become incapacitated, you’ll need a durable POA.
- If you only need someone to make decisions for you while you’re capable, a general POA might be enough.
Consider your future, too. A durable POA can give you peace of mind in case something unexpected happens. Talk to your family and trusted advisors to help you decide.
Frequently Asked Questions
Which is better, general or durable power of attorney?
Neither is “better” in all situations; it depends on your needs. A general power of attorney is simpler but ends if you become incapacitated. A durable power of attorney continues even if you’re incapacitated, making it ideal for long-term planning and managing affairs if you lose capacity.
What can a durable power of attorney not do?
A durable power of attorney cannot override your own decisions if you’re still mentally competent. An agent can’t make healthcare decisions unless specifically authorized and can’t act against your known wishes. They also can’t change your will or make gifts beyond what’s authorized in the document.
What are the disadvantages of a durable power of attorney?
A potential disadvantage is the risk of agent abuse or misuse of power, as they have significant control over your assets. It requires careful selection of a trustworthy agent. There’s also a possibility of disagreements among family members regarding the agent’s actions.
What is the most recommended type of power of attorney?
A durable power of attorney is often the most recommended, especially for comprehensive estate planning. It provides continuous authority even if you become incapacitated, which is crucial for managing your affairs when you can’t. However, it’s best to consult with an attorney to determine the best type for your specific situation and ensure it aligns with your goals.
Summary
Understanding the differences between a general power of attorney and a durable power of attorney is essential. Choosing the right one is a critical part of planning your estate and protecting yourself and your loved ones.
Creating either type of power of attorney can be complicated, so it’s always a good idea to seek professional legal advice. An attorney can help you decide which type of POA is right for you and make sure it’s set up correctly.
Taking proactive steps now to establish a POA ensures that your affairs will be managed according to your wishes, even if you become incapacitated and cannot make decisions for yourself.