A power of attorney (POA) is an important part of estate planning. It lets you choose someone to act on your behalf, managing your affairs if you can’t. It’s a useful tool for planning for the future, especially as you get older.
There are two main types of POA: general and durable. So, what’s the difference between a general power of attorney (GPOA) vs durable power of attorney (DPOA)? Keep reading to find out.
What is a General Power of Attorney (GPOA)?
A general power of attorney gives another person very broad authority to act for you. This person, called your agent, can manage your money, sign legal documents, and handle most other tasks on your behalf.
But there’s a catch: a GPOA is only valid as long as you are mentally competent. It automatically ends if you become incapacitated and unable to make your own decisions.
So, when might you use a GPOA? It’s useful when you need short-term help managing your affairs. For example, if you’re traveling or temporarily unable to handle tasks yourself, a GPOA can allow someone to act for you while you still have the capacity to make decisions.
What is a Durable Power of Attorney (DPOA)?
A Durable Power of Attorney (DPOA) is similar to a regular POA, but it has a crucial difference: it remains in effect even if you become incapacitated. This means that if you can’t make decisions for yourself, the person you’ve chosen can still manage your affairs.
The DPOA’s authority lasts until your death or until you cancel it. That makes it a really valuable tool for planning for the future.
There are different kinds of DPOAs. A medical DPOA lets someone make healthcare decisions for you. A financial DPOA allows someone to manage your finances.
Key Differences: GPOA vs. DPOA
Although both types of POAs grant someone the authority to act on your behalf, the key differences lie in what happens if you become incapacitated and how long the agreement lasts.
Incapacitation: The Deciding Factor
The primary difference between a general power of attorney and a durable power of attorney is what happens if you become incapacitated and unable to make decisions for yourself.
A general power of attorney terminates immediately if you become incapacitated. A durable power of attorney, on the other hand, remains valid even if you are incapacitated.
Scope and Duration
Both a GPOA and a DPOA can grant broad powers to your agent, but the DPOA is designed for longer-term use, especially in case of incapacitation.
A general power of attorney lasts until you become incapacitated or you revoke it. A durable power of attorney lasts until your death or until you revoke it. The DPOA remains in effect even if you are incapacitated.
Planning Considerations
Planning for the possibility of incapacitation is an important part of estate planning. Talk with your family about your wishes and consider creating a durable power of attorney to ensure your affairs are handled according to your preferences if you are unable to handle them yourself.
Choosing the right type of power of attorney depends on your individual needs and circumstances. An estate planning attorney can help you decide which type of POA best suits your needs.
Setting up a POA: Key things to think about
Creating a POA is fairly straightforward, but it’s important to get it right.
Choosing an Agent
- You’ll need to name someone you trust to act as your agent.
- Make sure you talk to your agent and family about your wishes, so everyone is on the same page.
Legal Requirements
- You usually don’t have to file a POA with a court.
- You may need to have your signature notarized, especially if the POA involves real estate.
Seeking Legal Counsel
- It’s a good idea to talk to an attorney.
- They can help you tailor the document to fit your specific needs and make sure everything is in order.
Frequently Asked Questions
What are the disadvantages of a durable power of attorney?
A durable power of attorney grants significant authority to your agent, which carries the risk of potential misuse or abuse. It’s crucial to choose someone trustworthy. Also, it might not cover all situations, requiring additional legal documents. Plus, family disagreements can still arise even with a DPOA in place.
What is the best power of attorney to have?
The “best” power of attorney depends entirely on your individual needs and circumstances. Generally, a durable power of attorney is recommended for long-term planning because it remains effective even if you become incapacitated. However, you might also need a healthcare power of attorney for medical decisions.
What can a durable power of attorney not do?
A durable power of attorney can’t force you to do anything against your will, and it can’t make healthcare decisions unless it’s specifically designated as a healthcare POA. An agent also can’t change your will, vote on your behalf, or act against your known wishes. They also can’t act if you regain capacity.
What is the difference between durable POA and POA?
A regular power of attorney terminates if you become incapacitated, meaning it’s no longer valid when you need it most. A durable power of attorney, on the other hand, remains in effect even if you become incapacitated, making it a more robust and reliable option for long-term planning. Essentially, “durable” refers to its staying power.
To Conclude
It’s important to understand the difference between a general power of attorney (GPOA) and a durable power of attorney (DPOA) so you can be sure your wishes are carried out if you become incapacitated.
A POA is only one piece of a comprehensive estate plan, so it’s best to think about how it fits in with your will, trusts, and other legal documents.
Talk with an experienced attorney to make sure you create the right documents for your specific needs and circumstances.