A durable power of attorney is a legal way to allow a person to make financial decisions for another person in the event that the other person becomes incapacitated or does not have the ability to make those types of decisions for him- or herself. This type of power of attorney is granted in the form of a document and, if needed, can show others that the person handling the other person’s affairs has the legal authority to make decisions on that person’s behalf.
Although the person holding the durable power of attorney is allowed to make financial decisions on the other person’s behalf, they are not allowed to do whatever they want to do with the money or other assets. Instead, they must always act in the best interests for the other person. When doing so, they may pay bills, make investments, manage real estate investment, pay taxes and assist with financial accounts.
In addition to having a durable power of attorney for finances, the person may wish to have a medical agent that is responsible for deciding on his or her medical care. If this is not the same person that handles both, however, there is always the potential for the two to disagree over the person’s medical care.
It is important to note that upon the death of the individual, the durable power of attorney ceases to exist and the document is considered extinguished. At this point, if a will has been made, the executor of the will then becomes responsible for dealing with the person’s financial affairs after his or her death.
Understanding how a durable power of attorney works can benefit individuals who are concerned about their financial future in the event they become unable to handle their financial matters themselves.
Source: FindLaw, “Durable Financial Power of Attorney” accessed Mar. 06, 2015