Most people who deal with financial matters run into a durable power of attorney at some point or another. You might use a power of attorney when you buy a house, or when you receive settlement proceeds from a motor vehicle accident, or in any number of scenarios. However, power of attorney documents are not one-size-fits-all; a durable power of attorney is a must-have instrument for anyone truly concerned about long-term medical or financial implications.
What is a power of attorney?
Basically, a power of attorney instrument gives someone else the ability to act in your name. Most power of attorney documents are very specific and limited, restricting the designee's legal authority to a single transaction or matter. However, you can also make a more open-ended power of attorney, giving your broker the right to buy or sell shares of stock to best manage your investment account, for example. The scope of the power of attorney is typically defined within the document itself.
How does a durable power of attorney vary from the more simple variety?
The distinction between a simple power of attorney and a durable power of attorney is based on the status of the grantor. If the grantor becomes incapacitated through injury or mental illness, courts consider a traditional power of attorney " and void because the grantor no longer has the capacity to grant someone else the right to act. A durable power of attorney differs because it is valid even in the event that the grantor becomes incapacitated. A durable power of attorney is vital if you want to give other people the capacity to act on your behalf even when you're not capable of evaluating their decisions.
A durable power of attorney gives aging family members peace of mind.
While many people can benefit from a durable power of the attorney in the case of an accident or other unexpected incapacity, aging family members benefit even more from a durable power of attorney. It's an unfortunate truth that some people become incapacitated as they age, either from debilitating illnesses or unfortunate mental decline.
With a durable power of attorney in place, family members know that they'll be cared for even when they are unable to approve important medical or financial decisions. A durable power of attorney could give someone else the power to pay bills, administer investment accounts and proceeds and dispose of assets as needed. Durable power of attorneys also provide for medical care, giving family members the comfort of knowing that their wishes are respected even when they are unable to make them known.
A durable power of attorney may not cover both medical and financial needs.
As with a traditional power of attorney, a durable power of attorney is limited in scope to what's defined in the document. A durable power of attorney may cover only medical decisions, or only financial decisions; it's up to the grantor to ensure that the language is in place to suit his or her needs.
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