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What Is a Durable Financial Power of Attorney?

Written by: Rebecca Rosefelt, Esq. , Contributing Author
Reviewed by: Catherine Hodder, Esq. , Senior Legal Writer
Last updated March 12, 2024

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The durable financial power of attorney (POA) allows someone (a principal) to name someone else (an agent or attorney in fact) to manage finances on behalf of the principal in the event they become incapacitated.

Table of Contents

What Does “Durable” Mean?

Durability refers to a power of attorney remaining in effect if and when the principal is incapacitated.

For a power of attorney to be “durable,” it must contain language such as “This power of attorney shall not be affected by subsequent disability or incapacity of the principal or lapse of time” or similar terminology.

If a POA is not explicitly “durable,” your agent’s authority ends when you can no longer make your own decisions. This happens if you are incapacitated or deemed legally incompetent.

Remember, a general power of attorney authorization is only durable if specified in the legal document.

When It Begins

Generally, a durable POA goes into effect the moment you sign it. However, you can create a “springing” financial power of attorney. This means that the power is not granted to your agent until you are incapacitated. Springing powers can be durable or not.

When It Ends

The financial power of attorney is automatically extinguished upon your death. That means your agent can only make financial decisions for you while you are alive and incapacitated. To deal with financial matters or probate after your death, you need to name an executor in your will. Other ways a POA ends include:

  • Divorce (only in some states if your agent is your spouse)
  • Your named agent is unavailable
  • A court invalidates your document
  • You revoke your power of attorney while mentally competent

Because there are many ways for the power to end that you cannot plan on, it is helpful to name backup or alternate agents.

What Authority Can I Give My Agent?

You can limit your agent’s power, granting as much or as little authority as you think is appropriate. When deciding whether to set limits, consider the kind of tasks your agent must perform:

  • Paying your bills
  • Paying your taxes
  • Paying medical expenses
  • Managing your real estate assets
  • Accessing your financial accounts (including bank accounts and retirement accounts)
  • Investing on your behalf
  • Collecting retirement, social security, or other government benefits
  • Transferring and selling your assets
  • Buying insurance for you
  • Operating your small business
  • Hiring someone to represent you

Your agent cannot do whatever they want to do but must act in your best interests. One area of potential conflict to keep in mind is paying for medical expenses. Often, people also name a medical power of attorney who can make health care decisions for them and navigate their Medicare or Medicaid benefits. If your financial and medical agent differs from one another or disagrees on medical care, the financial agent may make receiving medical care difficult.

Creating a Durable Financial Power of Attorney

Many states have simple power of attorney documents to fill out to make someone your financial agent. Most states do not require that you use these statutory forms. You can use FindLaw’s state-specific financial power of attorney form to create a power of attorney in minutes.

Or, if you require legal advice regarding durable power of attorney forms or state laws, seek legal help from an elder law or estate planning attorney.

Generally, the document must be signed by you and notarized by a notary public. Depending on your state, you may need witnesses. If your agent has to deal with real estate assets, some states require you to put the document on file in the local land records office. Finally, many financial institutions have their own forms, and while not strictly necessary, it will make the process much easier if your bank knows who your financial agent is.

The only legal requirements for your power of attorney are that they are a) an adult and b) not incapacitated. You do not have to choose a family member or beneficiary – just someone you trust. It is a good idea to name backup or successor agents if your first choice is unable or unwilling to serve.

A Financial POA Is Only One Part of a Solid Estate Plan

A durable financial POA is essential but is only one part of your estate plan. You should also assign a health care power of attorney to make medical decisions on your behalf in case of incapacity. You may also want to express your wishes for end-of-life treatment with a living will or advance health care directive. And finally, a last will and testament allows you to appoint someone to manage your estate, name guardians for minor children, and distribute property according to your wishes.

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