When planning for the future, it becomes important to understand the legal instruments available for personal and financial affairs. Two common instruments are the power of attorney and the durable power of attorney. Both allow a person to appoint another individual to manage affairs on their behalf, but they serve distinct purposes and provide different levels of authority.
This article will explore the main differences between a power of attorney and a durable power of attorney, shedding light on their unique roles and when they might be most useful.
What is a power of attorney?
A power of attorney is a legal document that gives another person, known as the agent or attorney-in-fact, the authority to make decisions on behalf of the person who creates the power of attorney, known as the principal. The agent can handle financial matters, business transactions, and other legal matters. However, the authority of an agent under a power of attorney ends if the principal becomes incapacitated.
Understanding a durable power of attorney
On the other hand, a durable power of attorney serves a more specific purpose. Similarly, it allows an agent to manage the principal’s affairs. The distinguishing factor is that a durable power of attorney remains in effect even if the principal becomes physically or mentally incapacitated. It ensures the continual management of the principal’s affairs according to their wishes, regardless of their health condition.
Choosing between a power of attorney and durable power of attorney
The choice between a power of attorney and a durable power of attorney depends on the individual’s needs and circumstances. If the principal wants the agent’s authority to continue even if they become incapacitated, a durable power of attorney would be the best choice.
However, if they prefer that the agent’s authority ends upon their incapacitation, a regular power of attorney would be more suitable.
Although there are key differences, the right choice depends on the specific needs and circumstances of the individual involved.
