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What You Need To Know About Durable Power of Attorney

The durable power of attorney is a legal procedure that gives authority to a named individual to make important decisions about your possessions, healthcare, finances, and other vital areas of your life. It’s a means of managing your affairs if you are disabled. Our Q&A answers questions we have received concerning durable power of attorney.

What is a general durable power of attorney?
A durable power of attorney can be special or general. Under a special durable power of attorney, you limit your agent’s authority to specific acts. For example, you could limit your agent’s authority to the sale of a parcel of real property, the funding of a trust or the execution of tax returns. Under a general durable power of attorney, you generally authorize your agent to transact all business, financial, and personal affairs on your behalf.

Why do I need a general durable power of attorney?
The likelihood of a disability in your lifetime is real. The general durable power of attorney provides a flexible means of managing your affairs if you become disabled. It is much less costly and time consuming than a court-appointed and supervised guardianship or conservatorship.

Most people should consider signing a general durable power of attorney to provide for the management of their business and financial affairs if they become disabled. As the principal under a general durable power of attorney, you may choose the person who will manage your affairs and customize the agent’s authority to meet your needs.

If you become incapacitated without a general durable power of attorney, it may be necessary for a court to appoint a guardian or conservator for you. In that case, the court will choose the guardian or conservator. The guardianship or conservatorship is a public, court-supervised proceeding. Therefore, they are relatively expensive and time consuming.

When does a general durable power of attorney become effective?
A durable power of attorney becomes effective when the person who you name as agent may begin using it. It may become effective immediately upon your signature (“an immediately effective durable power of attorney”) or it may become effective upon the occurrence of a later event such as when you become disabled (“a springing durable power of attorney”).

You may choose the effective date. If you anticipate needing the assistance of the agent in the near future, you should choose an immediately effective power of attorney. If you do not want your agent to act unless you become disabled, then you should choose a springing durable power of attorney. As an alternative to a springing durable power of attorney, you may execute an immediately effective power of attorney, but escrow it with a third party who is instructed to deliver it to your agent only if you become disabled.

Does the general durable power of attorney take away your rights?
The execution of a general durable power of attorney does not take away any of your rights. Only a court can take away your rights. Your agent simply has the power to act for you in accordance with the terms of your durable power of attorney. You may customize the instructions in the durable power of attorney to meet your needs.

Whom should you select as your agent?
The selection of your agent is the most important decision you must make in the preparation of a durable power of attorney. The person must be someone in whose honesty and integrity you have complete confidence. Honesty and integrity, however, is not enough. Does he or she have good judgment? Is the person available? Does he or she have the necessary education or experience? Does he or she have a conflict of interest?

What happens if the person you select as your agent is unable or unwilling to serve when you need him or her? Clearly, it is important to provide for a successor agent(s).

Once you have selected your agents, you should ask them if they are willing to serve if called upon.

May you appoint more than one agent?
You may authorize more than one person to act on your behalf. You may authorize your co-agents to act independently, or you may require that they act jointly. If agents are independent of one another, issues arise when one agent says do “X” and the other agent says do “Y”. If you appoint co-agents, then you should consider providing for arbitration if the co-agents do not agree on how to act.

What duties does your agent owe you?
Your agent is a fiduciary. As such, he or she must act for your benefit with the utmost good faith and loyalty. Unless the power of attorney provides otherwise, the agent must:

• act in accordance with your reasonable expectations
• act in your best interest
• act only within the scope of authority granted by the power of attorney
• avoid conflicts of interest
• act with care, competence, and diligence
• keep records of all receipts, disbursements, and transactions made on your behalf
• keep your funds separate from his own
• cooperate with a person that has the power to make health-care decisions on your behalf
• attempt to preserve your estate plan

What duties do you owe your agent?
• indemnify the agent when the agent makes a payment within the scope of his authority that is beneficial to you or when the agent suffers a loss that fairly should be borne by you.
• deal fairly and in good faith

What powers will your agent have?
As mentioned above, an agent, with a few exceptions, may do whatever the principal may do, except as limited in the power of attorney. Some of the more common powers granted to an agent under a DPA include, but are not limited to, authority with regard to the principal’s:

• real property
• tangible personal property
• stocks and bonds
• commodities and options
• accounts with banks and financial institutions
• operation of entity or business
• insurance and annuities
• estates, trusts, and other beneficial interests
• personal and family maintenance
• benefits from governmental programs or civil or military service
• retirement plans
• taxes

Can you change your mind?
You may revoke your general durable power of attorney at any time. If you have possession of the originals of the general durable power of attorney, you should destroy all of them and notify the agent of revocation. If your agent has possession of the originals, then you should notify the agent of the revocation by certified mail and request that he or she return all original documents to you. From the moment the agent receives the notice, he or she may no longer legally act under the power of attorney. Keep in mind that third parties will be protected if your agent continues to act using the power of attorney. Therefore, you should give third parties notice of the revocation. You should notify all third parties with whom your agent has acted on your behalf. If the power of attorney has been recorded in the clerk’s office, then you should also record a notice of revocation. If you wish to revoke a DPA, I recommend that you consult with an attorney immediately.

Are you responsible for your agent’s actions?
Yes, if your agent was acting within the scope of his or her authority under the power of attorney.

How does the appointment of a conservator affect your power of attorney?
One of the reasons that you should consider the signing a power of attorney is to avoid the need for the appointment of a conservator. However, in some cases, a conservator may still be appointed. If a conservatorship is required, you may, within your power of attorney, nominate the person whom you wish to serve as your conservator. This nomination is not absolutely binding on the court, but it will be followed by the court unless convincing evidence is presented that the appointment of your nominee would not be in your best interest.

How are my medical decisions made when I am incapacitated?
Advance directives for health care (ADHC) are legal documents that specify advance medical instructions regarding your preferred medical treatment and your final wishes for life support.

With an advance directive in Georgia, you can instruct upon receiving specific medical treatment or insist that certain medical treatment is withheld, even if you are not consciously able to verbally state directions at that time. If you have a terminal condition or are in a permanently unconscious state, the advance directive is very useful for providing instruction to your medical care provider and your family members.

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