Table of contents:
Legal Definitions
Let’s begin by understanding the legal definitions of “durable” and “general” power of attorney.
Durable Power of Attorney
A durable power of attorney is a legal document that authorizes another person, known as an agent or attorney-in-fact, to make decisions on your behalf even if you become incapacitated.
General Power of Attorney
A general power of attorney, on the other hand, is a legal document that grants an agent the authority to act on your behalf in a wide range of matters, such as managing your finances, handling legal transactions, and making healthcare decisions, but it typically expires if you become incapacitated.
Scope and Authority
A durable power of attorney and a general power of attorney both grant authority to an agent to act on behalf of the principal. However, the scope of authority granted under each type of power of attorney varies.
A durable power of attorney grants authority to the agent to act on behalf of the principal even if the principal becomes incapacitated. This means that the agent can continue to make decisions about the principal’s finances, health care, and other matters even if the principal is unable to do so.
A general power of attorney grants authority to the agent to act on behalf of the principal only while the principal is capable of making decisions. This means that the agent’s authority ends if the principal becomes incapacitated.
Difference in Authority
- A durable power of attorney grants authority to the agent to act on behalf of the principal even if the principal becomes incapacitated.
- A general power of attorney grants authority to the agent to act on behalf of the principal only while the principal is capable of making decisions.
Duration and Termination
Both durable and general powers of attorney can have different durations and termination events.
A durable power of attorney remains in effect even if the principal becomes incapacitated, unless the document itself specifies an end date or event.
A general power of attorney, on the other hand, typically terminates when the principal becomes incapacitated or dies, unless the document specifically states otherwise.
Events that can terminate a durable power of attorney
- The principal’s death
- The principal’s revocation of the power of attorney
- A court order terminating the power of attorney
- The occurrence of a specific event or date specified in the power of attorney
Events that can terminate a general power of attorney
- The principal’s death
- The principal’s incapacity
- The principal’s revocation of the power of attorney
- A court order terminating the power of attorney
Purposes and Uses
Durable and general powers of attorney serve distinct purposes and have varying scopes of authority. Understanding these differences is crucial when choosing the appropriate type of power of attorney for your specific needs.
A durable power of attorney remains valid even if the principal becomes incapacitated, while a general power of attorney terminates upon the principal’s incapacity.
Common Purposes of a Durable Power of Attorney
A durable power of attorney is commonly used for:
- Managing financial affairs, such as paying bills, investing, and filing taxes.
- Making healthcare decisions, including consenting to medical treatments and managing end-of-life care.
- Handling legal matters, such as signing contracts, selling property, and representing the principal in court.
Common Purposes of a General Power of Attorney
A general power of attorney is typically used for:
- Performing specific tasks, such as signing a contract or selling a particular asset.
- Handling temporary matters, such as managing finances during a vacation or business trip.
- Granting limited authority to an agent for a specific purpose.
Situations Where a Durable Power of Attorney is More Appropriate
A durable power of attorney is more appropriate when:
- The principal anticipates future incapacity or wants to ensure their affairs are managed in the event of incapacity.
- The principal needs someone to manage their affairs for an extended period.
- The principal wants to grant broad authority to their agent to handle a wide range of matters.
Situations Where a General Power of Attorney is More Appropriate
A general power of attorney is more appropriate when:
- The principal needs someone to handle a specific task or matter for a limited time.
- The principal wants to retain control over their affairs and only grant limited authority to their agent.
- The principal anticipates being able to manage their own affairs in the future.
Advantages and Disadvantages
Durable and general powers of attorney are legal documents that can be used to grant someone else the authority to act on your behalf. There are both advantages and disadvantages to using each type of power of attorney.
Advantages of Using a Durable Power of Attorney
– Provides peace of mind knowing that someone you trust can make decisions for you if you become incapacitated.
– Can be used to manage a wide range of financial and legal matters, including paying bills, managing investments, and making medical decisions.
– Can help to avoid the need for a guardianship or conservatorship if you become incapacitated.
Advantages of Using a General Power of Attorney
– Gives the agent broad authority to act on your behalf in all matters.
– Can be used to handle a specific task or a wide range of tasks.
– Is typically less expensive to create than a durable power of attorney.
Disadvantages of Using a Durable Power of Attorney
– Can be difficult to find someone who is willing and able to serve as your agent.
– The agent may have too much power and could abuse their authority.
– The power of attorney may not be valid if you become incapacitated.
Disadvantages of Using a General Power of Attorney
– Gives the agent too much power and could lead to abuse.
– May not be valid if you become incapacitated.
– Can be difficult to revoke.
Legal Requirements and Formalities
Creating a durable or general power of attorney involves adhering to specific legal requirements and formalities to ensure the document’s validity and enforceability.
Both types of powers of attorney require proper execution and witnessing to be legally binding. The specific requirements may vary depending on the jurisdiction, but generally include:
Requirements for Durable Power of Attorney
- Must be in writing and signed by the principal (the person granting the power).
- Must be witnessed by two witnesses who are not related to the principal or the agent (the person receiving the power).
- May require notarization in some jurisdictions.
- Must clearly state that the power is durable and will remain in effect even if the principal becomes incapacitated.
Requirements for General Power of Attorney
- Must be in writing and signed by the principal.
- Must be witnessed by one or two witnesses, depending on the jurisdiction.
- May require notarization in some jurisdictions.
- Does not need to specify that the power is durable, as it is implied to terminate upon the principal’s incapacity.
Role of the Agent
Under a durable power of attorney, the agent has the authority to make decisions on behalf of the principal, even if the principal becomes incapacitated. This means that the agent has a significant amount of power and responsibility. The agent’s role is to act in the best interests of the principal and to make decisions that the principal would have made if they were able to do so.
Under a general power of attorney, the agent’s authority is limited to the specific tasks that are Artikeld in the document. This means that the agent cannot make decisions that are not specifically authorized by the principal. The agent’s role is to carry out the principal’s instructions and to make decisions that are consistent with the principal’s wishes.
Fiduciary Duties of the Agent
Both durable and general power of attorney agents have fiduciary duties to their principals. These duties include:
- Duty of care: The agent must exercise reasonable care in carrying out their duties.
- Duty of loyalty: The agent must act in the best interests of the principal.
- Duty of confidentiality: The agent must keep the principal’s information confidential.
- Duty of accounting: The agent must keep accurate records of all transactions and provide regular accounting to the principal.
Consequences of Breaching Fiduciary Duties
If an agent breaches their fiduciary duties, they may be held liable for damages. This means that the principal may be able to recover any losses that they suffered as a result of the agent’s breach of duty. In addition, the agent may be removed from their position and/or be ordered to pay punitive damages.
