Durable Power of Attorney: Everything You Need To Know
The Durable Power of Attorney for Financial Matters (“DPOA”) is an immensely important part of every estate plan. However, it is important to recognize when the document may not accomplish your goals.
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.
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.