Durable General Power of Attorney: Four Things to Know

An introduction: a Durable General Power of Attorney is another crucial estate planning tool. This document grants your named "Agent" the authority to act on your behalf with financial, property, and legal matters and is valid during your lifetime only.

When you make the Durable General Power of Attorney document, you can limit the extent of your Agent's power or grant them broad authority. Your Agent's authority activates when the Durable General Power of Attorney is properly signed and notarized (unless the document contains springing provisions - contact me for more info on that).

Having an Agent in place is immensely helpful when you cannot manage your affairs - whether that's a temporary or permanent situation. And, many people appreciate the flexibility a Durable General Power of Attorney allows at all other times. Last but not least, the "durable" part of this document refers to its ability to "endure" (or stay in place) if you become legally incompetent. Without that durability, a Guardianship court proceeding happens, and the judge decides what happens next.

Four things to know:

(1) COURT. Unlike other areas of estate planning, there is no default under the law about who has the right to manage your financial, property, and legal affairs if you cannot take care of them yourself. What about my spouse, you ask? Nope, my answer is the same. Under the law - your spouse does not have the default authority to take over for you. 

Put another way, if you cannot manage your affairs and something needs to happen, you'll go to court. And at the end of the costly and often heartbreaking case, a judge will determine your competency. If the judge's verdict is incompetency, a guardian is appointed to act on your behalf. 

None of that happens if you have a Durable General Power of Attorney in place.

(2) MONEY. Your Agent has the authority to manage your financial assets on your behalf. With proper documentation and proof of ID, they'll be able to make deposits and withdrawals for you, write checks/pay bills, and even open and close accounts. 

It's a lot of power, for sure. And, if you need/want to, you can limit their authority & abilities in the text of the Durable General Power of Attorney document itself.

But, giving your Agent broad authority isn't (necessarily) a mistake. Remember - if someone needs to access your funds and you cannot do it for yourself AND you don't have a Durable General Power of Attorney in place - the next stop is a Guardianship/Competency court hearing. And, your Agent is not able to do as they wish with your assets! The laws of fiduciary duty bind them to protect your assets and act in your best interest. Contact me for more info on fiduciary duty laws.

(3) LEGAL MATTERS AND DOCUMENTS. Under the terms of your Durable General Power of Attorney, your Agent can act on your behalf in/for legal matters. 

Your Agent can do things like appearing on your behalf at court or in other legal proceedings, filing a lawsuit (or a response) for you, negotiating and settling matters you're involved in, and more.

And they can sign legal documents on your behalf. Any of those documents you sign for yourself with legal provisions - from tax returns to beneficiary designations to buy/sell agreements and beyond - your Agent can sign those for you.

(4) REAL ESTATE. Yep, your Agent can buy, sell, lease, give away, receive, etc., real estate on your behalf. They can also negotiate deals and manage development projects. Need to refinance the mortgage - that's possible too. And more. (Note: transactions with real property by a Durable General Power of Attorney Agent are an area of law where a few extra steps are often needed, such as recording the document at the county Register of Deeds office).