Durable (Financial) Power of Attorney Forms

The Durable (Financial) Power of Attorney Forms are legal documents that empower a capable individual (called the Principal) to appoint another trusted person or entity (their Agent / Attorney-in-Fact) to manage their finances in one or more specific ways even in the event of their incapacity. These forms recognize the importance for an individual to prepare for the possibility that future health issues may prevent them from taking care of vital financial matters. Essentially, a Durable Power of Attorney (POA) helps a Principal ensure that their incapacity and subsequent loss of ability to manage their finances would not negatively impact on their finances.

Durable Power of Attorneys by State

What is a Durable Power of Attorney?

A Durable Power of Attorney is a legal form that represents a decision by the Principal to grant their Agent the legal power to perform certain financially-related transactions in their name.

The defining feature of this form is that it must include one or more provisions about the fact that if the Principal becomes incapacitated (see definition below), the agreed-upon terms will continue to be applicable as usual. By implication, this form grants express permission for the Agent to continue performing their duties to the Principal regardless of whether they enter into a state of incapacity.

In such circumstances, because the Principal will be physically and/or mentally incapable of expressing their wishes for themselves, the Agent will be required to make critical decisions that are in line with any instructions the Principal stated in the Power of Attorney. In some cases, they will need to make decisions based on what they believe to be in the Principal’s best interests.

This form thus contrasts to a General Power of Attorney, which is a type of POA that will cease to be effective if the Principal becomes incapacitated.

How to get a Power of Attorney

The process of getting a Durable Power of Attorney is relatively straightforward:

1. Select an Agent / Attorney-in-Fact

The Principal must choose their own Agent to carry out the tasks they require assistance with. The individual or entity chosen should be responsible, trustworthy, and reliable. In cases where the tasks require some level of expert knowledge or skill to complete, the Agent should possess such knowledge or skills.

2. Fill out a Durable Power of Attorney form

The Principal will next need to complete a Durable Power of Attorney form that is compliant with their state’s particular laws. If they would instead prefer to use another type, they can choose from the various types of Power of Attorney forms.

3. Ensure any signing requirements are followed

The Principal will need to complete any state-mandated signing requirements. Many states will require the presence of a Notary Public and/or witness/es.

4. Provide copies to all relevant parties

The parties to the contract, namely the Principal and the Agent, will both need to hold copies of the contract.

5. Abide by the terms of the contract

When the contract comes into effect, all parties will be required to abide by its terms.

Durable Power of Attorney FAQ

– What does “incapacity” mean?

“Incapacity” refers to the state of the Principal being physically or mentally unable to adequately make and/or communicate decisions on their own behalf due to certain circumstances. As each state’s Power of Attorney laws provide a legal definition of this term, the Principal should refer to their respective state’s definition. For example, states that have adopted the Uniform Power of Attorney Act, such as Connecticut, Kentucky, and Georgia, use the following definition:

 “Incapacity” means inability of an individual to manage property or business affairs because the individual:
(A) Has an impairment in the ability to receive and evaluate information or make or communicate decisions even with the use of technological assistance; or
(B) Is:
(i) Missing;
(ii) Detained, including incarcerated in a penal system; or
(iii) Outside the United States and unable to return.

– What is covered by a Durable POA?

A Durable POA may cover two main issues:

  1. The Principal’s finances, and
  2. The Principal’s healthcare wishes

1. Finances

The Principal may specify how they would like their elected Agent to manage their finances in their absence. Examples of tasks a Durable (Financial) Power of Attorney may require an Agent to do include:

  • Depositing funds into the Principal’s bank account,
  • Withdrawing funds from the Principal’s bank account,
  • Making investments,
  • Paying an individual or entity for their goods or services,
  • Organizing for the collection of funds from an individual or entity,
  • Donating to an organization in the Principal’s name,
  • Collecting rental payments from the Principal’s tenants,
  • Writing and cashing checks, and
  • Managing the Principal’s overall finances.

2. Healthcare

As outlined in the section below, “Does a Durable POA include medical?” it is strongly advised that a Principal who wants to cover healthcare issues in a Power of Attorney does so using a separate legal document called a Medical Power of Attorney or Power of Attorney for Healthcare.

This document makes it possible for the Principal to both make their healthcare wishes known and to elect an Agent who will act on their behalf to assert these wishes if they one day become incapacitated.

– Does a Durable POA expire?

Unless the Principal has included an expiration clause in the POA, it will only expire upon their death. As the contract is durable by its very nature, it will not expire upon the Principal’s incapacity.

With that said, it should be kept in mind that some entities, such as financial institutions, may not accept a Durable Power of Attorney that was executed a considerable time ago. While theoretically, the contract may not have an expiration date, an entity may nevertheless require an Agent to obtain a newly created POA.

The reason why is that the entity may wish to safeguard the interests of the Principal as well as themselves by ensuring that the contract is not expired, invalid, or fake.

– When does a Durable POA end?

A Durable POA will end when the Agent learns of the Principal’s death or, in the case that a specific expiration clause is included, when the specified date / circumstance eventuates. It may also be terminated by the Principal themselves or the Agent may either choose to or be forced to exit the agreement.

In the case of the Principal’s death:

A Durable Power of Attorney will become ineffective upon the Principal’s death. However, many state POA laws explicitly state that an Agent will not be held legally accountable for any actions performed after the Principal’s death if they were unaware of this fact.

In the case that an expiration clause is included in the Durable POA:

If a lawfully executed Durable Power of Attorney states a specific date it will end, or it states one or more circumstances that will cause it to stop, the POA will terminate in line with this clause. For example, an expiration clause may state that the contract will end on July 15, 2025. Or, an expiration clause may state that the contract will end in the circumstance that the Principal is diagnosed with an incurable disease.

In the case that a Principal revokes the contract:

All states permit the Principal of a Durable Power of Attorney to revoke it at any time for whatever reason. While the methods a Principal may lawfully use to do so may differ state by state, completing and executing a Revocation of Power of Attorney form is a method legally approved by all fifty states.

This form states in clear terms the Principal’s decision to end the Durable POA. Upon its execution, the Agent’s powers will cease. Similar to the circumstance surrounding a Principal’s death, many states note in their POA laws that an Agent will be protected from prosecution if they continue to exercise their duties if they have not been duly informed of the Principal’s death.

Some states also permit a Principal to terminate a Durable POA by destroying it. However, using only this method is highly inadvisable as it does not allow for a paper trail to be created. Creating a paper trail to record the dissolution of any contract minimizes the possibility that the Principal’s decision to terminate it will be disputed. It is far easier to prove that the Principal decided to end it with the existence of a separate legal contract stating this fact than simply showing evidence of a destroyed POA.

In the case the Agent exits the agreement

There are some instances where the Agent will choose to end a Durable Power of Attorney agreement. Likewise to the Principal, the Agent has the prerogative to exit the contract if they do not wish to continue their duties. In order to do so, they will need to duly inform the Principal of their decision. If there are specific instructions for resigning that are noted in the POA, they will need to be followed. If there are no instructions are available, the Agent should resign from their position by furnishing the Principal with a formal letter of resignation.

Two other circumstances directly involving the Agent will cause it to end:

  • If the Agent becomes incapacitated, or
  • If the Agent dies.

– Does a Durable POA include medical?

In most cases, a Power of Attorney that addresses the medical wishes of the Principal is durable in nature.

Theoretically, it may be possible (at least in some states) for medical Power of Attorney matters to be included in a standard Durable POA. However, given the importance of creating clear and precise provisions and instructions, it is strongly advised that a separate type of POA form is used: a Medical Power of Attorney (also known as a “Power of Attorney for Health Care”).

It is also vital to note that likewise to Durable Power of Attorney state laws, the laws concerning Medical POA forms differ from state to state. To exemplify this point, consider how the creator of this legal document is referred to by different states. In most states, this individual is referred to as “the Principal.” Whereas, in Kentucky, they are referred to in the law as “the Grantor,” and in New Jersey, “the Declarant.”

Beyond this difference, what is and is not legally permitted differs considerably across the country. For example, while the majority of state Medical POA laws include provisions about behavioral / mental health treatments, Louisiana’s do not. This example illustrates the importance of not assuming that specific provisions will be universally applicable across all of the states. To ensure full compliance with state laws, it is thus crucial for anyone considering creating a Medical POA to consult their respective state’s laws before completing and filing the form.