Health & Medical Health Care

Using the Durable Power of Attorney

The “durable power of attorney” is one of the most powerful planning tools that an attorney can recommend to a client, not only for estate planning, but also for Medicaid and other public benefit planning.

When a person (the principal) signs a power of attorney, he gives another person (the agent) the power to act in his place and on his behalf in managing his assets and affairs. The agent’s powers may be broad and sweeping so as to include almost any act which the principal might have performed. It should be noted, however, that, in general, acts which are inherently testamentary in nature, such as the authority to make or revoke a will, may not be performed by an agent.

A power of attorney can be either a “general” power of attorney, where the agent may perform almost any act the principal might have performed himself regarding the financial management of his affairs, or a “limited” power of attorney where the agent has one or more specific powers, such as the power to sell a particular property to a particular purchaser at a particular time.

A single principal may name one or more agents who can be authorized to act either “jointly” or “severally” (alone without the signature of the other agent or agents).

The “durable” power of attorney is unlike the ordinary power of attorney in that it does not become inoperative upon the incapacity of the principal. The durable power of attorney, provides that those powers granted to the agent shall not be affected by the subse-quent disability or incapacity of the principal or by the lapse of time.

In drafting powers of attorney, care should be given to confer powers with as much specificity as possible in order to avoid the possibility of a court construing a specific omission as an intent to fail to grant that specific power. Such an adverse finding could be a serious detriment to the principal’s assets. The power of attorney for asset management in the case of a seriously ill or disabled person is especially useful in situations where the person’s assets may be modest and, accordingly, do not warrant the expense associated with other planning techniques such as trusts or guardianships.

The great advantage of the durable power of attorney is that it remains in effect after the principal’s incapacity. The agent, therefore, can act immediately upon the principal’s incapacity to manage his assets or to take various measures without initiating costly and time consuming guardianship proceedings to obtain the court’s authorization for such transactions.

In a few states, the principal is allowed to delegate to the agent in the durable power of attorney various health care powers in addition to control over financial matters. In New York State, however, a health care power of attorney or proxy must be a separate document from a power of attorney.
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