You may have heard the term durable power of attorney, but you may not know what it is, how it works, and whether you need one.
A power of attorney authorizes someone else to act on your behalf in financial, business, legal, and personal matters. A durable power of attorney means that the power of attorney will remain in effect even in the event that you become mentally incapacitated. Durable powers of attorney become effective immediately, once signed by the principal and agent and notarized. However, you can revoke your durable power of attorney at any time and the appointed attorney-in-fact is always responsible to account for his or her actions performed as your agent.
Many people mistakenly believe that signing a durable power of attorney eliminates their power over their own assets. However, this is not true. A durable power of attorney simply gives authority to an agent to act in addition to the authority of the principal to do so, but it doesn’t take away the power of the principal.
A mentally incompetent individual cannot execute a power of attorney. In order for the document to be valid and legally binding, the principal must understand the types of powers he or she is granting to the agent, and what it means to delegate that power.
In New York, unlike most states, a power of attorney does not give medical decision-making powers to your designated agent. Instead, New York requires a document called a health care proxy to accomplish the transfer of medical decision-making power to another.
Finally, it’s important to periodically review your durable power of attorney to keep it updated. In addition to changes in the laws that govern durable powers of attorney, many circumstances can change over the span of a couple of years — you may have had a falling-out with your niece who you selected as your agent, or maybe the person you had designated now has psychological, financial, drug or alcohol problems. By reviewing your decisions every few years with your attorney, you will have the agents that best suit when your durable power of attorney is actually needed.
It’s important to consult with your experienced New York wills attorney to help you draft this vital document before you actually need it. It is also important to keep your government identifications valid (passport, driver license or non-driver identification). Many financial institutions require an agent to produce a valid government form of photo identification, for the person they are acting on behalf, before they will accept the agent’s authority to act on behalf of the principal.