Scott & Huff, P.C.

1000 S. Garfield Ave.
Suite 3
Traverse City, MI 49686
(231) 933-5322



What is a Durable Power of Attorney?

By: Diane Kuhn Huff

 

        A Durable Power of Attorney is a document that appoints some one to act for you.  You are called the “principal”, and the person named is called the “agent.”  The document is often referred to as a DPOA.  A DPOA allows the agent to act for the principal when the principal is unavailable, ill or simply at the convenience of the principal.  The principal can revoke the DPOA at any time.  The principal remains in control of his or her funds until such time as he wants to turn it over to another or becomes incompetent.

A DPOA can avoid a court ordered conservatorship when the principal becomes incompetent.  The DPOA can be more flexible than a conservatorship by allowing the agent to make gifts or change an estate plan, neither of which a court can accomplish. 

            A DPOA can be made effective upon signing or effective only when the principal becomes incompetent.  In either type, thoughtfulness and prudence is needed in naming the agent.  Like all grants of power, the power under a DPOA can be abused.  The DPOA provides a mechanism for abuse, and although the funds may be recovered, the anxiety and resentments the abuse causes can run deep.

            Here are some suggestions on who to consider as Agent under a DPOA:

  • Choose someone who is a good money manager.  If the person doesn’t pay his or her own bills on time, chances are he’ll be late on your bills too.
  • Choose someone who keeps good records.  Sometimes, the agent must explain the transactions to the other family members, the court or a government agency.
  • Choose someone who is willing to share the information with the family.  Secrets cause suspicion and resentment.  An open book policy keeps the agent honest. 
  • Don’t choose someone who has financial problems.  If one child is always asking you for money, chances are that he or she will be generous with your funds when control is obtained.
  • Sometimes choosing two people to work together provides safeguards.  If two people are chosen, make sure they can get along. 

·                    The agent doesn’t necessarily need to live close to the principal. Most bills are paid by mail and the company is just as willing to send the bill to Nebraska as they are to send it locally.  Social Security and pensions can be directly deposited to your bank account.  Internet banking makes proximity to the local branch unnecessary.

If written with thoughtfulness and care, the Durable Power of Attorney gives the agent instructions on how to handle the principal’s affairs. A Durable Power of Attorney is an important part of a person’s estate plan. 

 

Back to List