Durable Power of Attorney: Everything You Need To Know
What is it? A Durable Power of Attorney is a legal document which authorizes a third party, referred to as your agent or “attorney in fact” (no they don’t need to be an actual attorney), to manage your financial matters when you’re unable to do so.
When does it become effective? A DPOA can be drafted so that it immediately authorizes the third party to handle your financial affairs. Alternatively, the DPOA can be “springing” so that it doesn’t become effective until you become incapacitated.
What types of powers does my agent receive? A DPOA permits you to specifically identify which powers you desire the attorney in fact to possess. Generally, you want the DPOA to be as broad as possible since you don’t know what specific powers may be needed.
Does the DPOA always work? While most DPOAs specifically authorize your agent to deal with real estate, most title companies (or their underwriters) will not accept a validly executed DPOA to facilitate the sale of real estate despite compliance with state law. The unfortunate consequence is that your family may have to resort to an expensive and time consuming guardianship proceeding to complete a sale of real property.
Is there a simple way to solve this problem? Yes, as long as it is accomplished while you retain capacity to revise your estate plan. Title Companies request a sale utilizing a DPOA be “specific to the transaction”. For example, you are in the process of closing on a purchase of a new home but have to be out of the country for business. A DPOA can be drafted in which you specifically authorize your agent to complete the pending transaction. However, the more common situation is where you become incapacitated and can no longer manage your affairs. Your agent determines that it is appropriate to sell your home and relocate you near them. The Title Company will not permit the DPOA to be used because there is no reference to your specific property owned at the time. However, by simply including this reference, many Title Companies will permit the transaction to proceed.
The only drawback to this technique is the need to execute a new DPOA each time you acquire a new property. However, this is a small price to pay when compared to the costs of a guardianship process. If you would like to learn more about DPOA’s, please download our free guide to Estate Planning. 
Dementia No Longer a Barrier to the Execution of DPOAs
A Durable Power of Attorney (“DPOA”) for Health Care Decisions is a crucial part of every estate plan. Recent changes in the law have made this document an even greater tool to avoid time-consuming and costly guardianship proceedings.
The Purpose of DPOAs
A DPOA enables you (the “principal”) to provide instructions to a third party (the “agent”) regarding crucial decisions when you are incapacitated and no longer able to manage your health care decisions without assistance.
Properly executed DPOAs enable your agent to provide assistance without having to resort to filing for guardianship proceedings. The delays and expenses encountered by loved ones having to seek guardianship can be devastating.
Requirements to Execute a DPOA
In order to execute a DPOA, the principal must be “of sound mind”. This means you must have the ability to understand the benefits, risks, and effects of signing the document. Dementia is a condition that affects executive functioning (decision-making ability, judgment, and focus). Dementia is not a normal consequence of aging, although it does become much more common as people get older.
While everyone experiences memory lapses or a mild slowing of cognitive abilities as they age, dementia is a pathological condition that impairs thinking to the point of disability. However, a diagnosis of dementia does not automatically mean someone is incapacitated as there is a spectrum of different levels of dementia ranging from mild cognitive impairment to severe dementia.
In the past, there was a concern that a DPOA executed by principal suffering from dementia would not be recognized or enforceable and loved ones would have no choice but to resort to guardianship proceedings.
New Law Regarding DPOAs
In 2019, the Nevada Legislature approved NRS 162A.870 which prescribes a DPOA for healthcare decisions that can be executed by an adult with any form of dementia.
This form essentially nominates someone to make health care decisions for the principal if he or she is sick or hurt and needs to see a doctor or go to the hospital. The document indicates that after you speak with the doctor, you would like the agent to help decide what care or treatment you should receive.
The agent is authorized to see copies of all medical records as well. The DPOA provides that the agent cannot make the principal receive any care or treatment he or she does not want and that the power of attorney may be revoked by telling them of the revocation or reducing it to writing.
The statute also allows for a principal diagnosed with dementia to include end-of-life decisions regarding the discontinuation of medicine or treatment.
The Catch
The DPOA for adults with dementia relates solely to health care decisions and does not authorize the agent to assist the principal with financial decisions. As a result, absent careful pre-planning, the family may still have to result in guardianship proceedings in certain instances.
In addition, the statute provides that the principal must acknowledge that they understand what the designation of the agent means; however, it doesn’t specifically explain this standard. As a result, someone with moderate to severe dementia may not be able to utilize the new DPOA for health care decisions.
Unfortunately, this could lead to challenges to a DPOA if certain family members maintain that a loved one didn’t understand the document at the time it was signed. As a result, it is always recommended to consult with the principal’s physician to obtain additional support that despite the dementia diagnosis, the principal is capable of understanding the DPOA.
In making this determination, the physician will consider the principal’s orientation to time, place, person, and situation; ability to concentrate, short and long-term memory; ability to understand or communicate with others; ability to understand and appreciate quantities and the ability to reason logically.
Despite these potential impediments, the DPOA for adults with dementia is still a useful tool that should be considered. The assistance of an experienced estate planning attorney is vital to constructing an estate plan in order to minimize the prospects of challenges down the road.
Drizin Law is providing this information for educational purposes only. It should not be construed as legal advice or a legal opinion as to any specific facts or circumstances. This information is based on general principles of Nevada law at the time it was created and you should be aware laws frequently change. Moreover, the laws affecting you may differ depending on the circumstances. You should consult with a qualified attorney in your own state or jurisdiction concerning your particular situation. Review of this information does not create an attorney-client relationship.
