What is durable power of attorney?

Durable power of attorney is any financial or medical powers of attorney that remain in effect even after you become incapacitated.

Derek Silva

Derek Silva

Published September 18, 2020

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KEY TAKEAWAYS

  • A power of attorney (POA) and durable power of attorney (DPOA) are very similar except a DPOA continues even if you’re incapacitated

  • You can find free durable POA forms online; some digital services charge a small fee for POAs; you can also hire an estate planning lawyer

  • All durable powers of attorney expire when their creator (the principal) dies

A durable power of attorney is any power of attorney that continues even if you become incapacitated. A power of attorney (POA) is a legal document that gives someone (your agent) the legal authority to make financial or medical decisions on your behalf. A standard POA does not take effect if you are mentally or physically incapacitated — unable to take care of yourself or make decisions for yourself.

The two most common types of POA are a financial power of attorney and a medical power of attorney. Both financial and medical powers of attorney can be durable POAs, it just depends on the language included in your legal documents. It’s possible to create one POA document that covers both powers of attorney, but it’s more common to create separate documents.

A power of attorney document isn’t necessary, but it’s a very useful part of your estate plan. Without a durable POA, your next of kin will likely be tasked with making decisions on your behalf, and likely at a time when they’re already upset because you’re sick or injured. You may also want to consider creating a living will (also called an advance directive) in conjunction with your durable POA. A living will is an informal document that contains specific instructions on the end-of-life care you want, and your durable power of attorney gives someone the right to carry out your wishes.

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Power of attorney vs durable power of attorney

A power of attorney is a legal document that grants someone — called an agent or an attorney in fact — the legal right to make financial, legal, or health care decisions for another person — called the principal — when the principal is unable to do so. For example, you may use a POA to have someone sign a contract while you’re away on business or in another state.

Normally, a POA expires in the event of permanent disability or incapacity — a time when the principal is mentally or physically unable to care for themself. A durable power of attorney grants an agent powers even if the principal is incapacitated.

Otherwise, a POA and durable POA are very similar. The authority granted by a POA depends entirely on what powers the principal includes in the POA forms. You can create a general power of attorney, which grants someone broad authority to make decisions for you, or you can grant very limited power — like creating a POA that allows your friend to sign a single contract while you’re out of town, and then expires.

Like a POA, you can also create a durable financial power of attorney or a durable medical power of attorney. A medical power of attorney is usually set up as a durable POA, since it would probably be most necessary when the principal is mentally or physically unable to make health care choices for themself. (A medical POA is also called a health care directive or a health care proxy.)

Regardless of the type of POA, all durable powers of attorney expire if the principal dies.

Learn more about how power of attorney works.

How to create a durable power of attorney

In some cases, creating a durable power of attorney is as easy as filling out a form. You name the situations you want the POA to cover and you name your agent. Some states allow multiple agents and you may want to name a successor agent to take over in the event your primary agent is unavailable to carry out their duties. Anyone you choose has a fiduciary duty — a legal responsibility to act in your best interests.

You can find simple POA forms online and fill them out for free if you want. If you go with a free form, make sure it will work in your state (laws can vary widely by state). You should also customize the form to your needs. Your agent will only have authority in the scenarios you allow, so decide whether you want a general power of attorney, covering many scenarios, or a POA that only covers very specific circumstances.

If you want a more detailed POA, consider working with an estate attorney or an elder law attorney. Estate lawyers specialize in estate planning matters, and elder law attorneys specialize in legal matters related to old age. Either type of attorney could help you understand your options and create a solid POA form that covers exactly what you want it to cover. Lawyers are the most expensive option, but they can create ironclad documents.

Learn more: How to find an estate attorney

A good middle-of-the-road option, in terms of cost, is to use an online service that helps you create a POA. Just make sure any digital service you use has attorney-approved tools, will work in your state, and will cover the situations you want covered.

In many states, your durable POA is not valid unless it has been notarized and signed by two witnesses.

How much does a durable power of attorney cost?

The cost to create durable power of attorney documents depends very much on how and where you create the documents. Hiring an estate planning attorney to create your durable POA documents could cost you a few hundred dollars or more, depending on where you live. Meanwhile, you may be able to find a form online and fill it out for free (though getting it notarized may cost you money). There are also digital services that charge a couple hundred dollars or less, depending on the contents of your durable POA. In general, a durable POA will cost more than a non-durable power of attorney document.

It’s common for people to draft their durable POA documents at the same time as drafting other estate documents, like a will and living will. This ensures that everything works well together to lay out — and maybe one day carry out — your wishes. You may have to pay for each individual document, or you may be able to get one price that covers multiple documents. (For example, the Policygenius app lets you create a will, financial power of attorney, and health care directive all for one price of $120.)

Durable power of attorney & trusts

A durable power of attorney does not give anyone the authority to handle money or assets you have in a trust. Whether you have a revocable trust or an irrevocable trust, the trustee is always responsible for it’s administration, not your agent. If you are the grantor (creator) and trustee for your own trust, and you become incapacitated, then the successor trustee named in your trust document who will take over. If no successor trustee was named, a court will need to decide who should serve as trustee.

Related article: Should you create a trust if you have a will?

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Personal Finance Expert

Derek Silva

Personal Finance Expert

Derek is a tax expert at Policygenius in New York City. He has written about multiple personal finance topics in the past, and his work has been covered by Yahoo Finance, MSN, Business Insider and CNBC.

Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.

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