Friday, February 17, 2017

What is a "Durable" Power of Attorney?

A Power of Attorney is a legal document you use to authorize another person to act on your behalf. The rules governing powers of attorney are generally a matter of state law. Many state laws are based on the Uniform Power of Attorney Act. But the terminology and rules can vary substantially from state to state.  This article is based on Pennsylvania law as it exists in February 2017.
In Pennsylvania, the person granting the power is called the “principal.” The person who receives the authorization is called the “agent.” 
The authority granted by a POA depends on the language used in the document. Some powers of attorney are “limited.”  This means that the agent’s powers are limited to performing a single act or set of acts. For example you might give a limited POA to authorize someone to sell your car or house. On the other hand, the term “general” power of attorney is typically used to describe a document that gives the agent very broad powers.
Prior to 1974, the Pennsylvania law regarding powers of attorney was based entirely on the common law of agency. One aspect of that law was that an agent’s authority would terminate if and when the principal died or became incompetent. The disability of the principal served to revoke the agency.
However, many people wanted to be able to create a power of attorney that would designate someone else to act for them exactly because they had become incapacitated. They wanted to avoid the complications of creating a formal trust or the need to be subjected to guardianship proceedings. The aging of society and increasing longevity was exacerbating the need for a simpler and more accessible way for people to plan for their potential future incapacity.  
To meet this need, Pennsylvania enacted Act 295 of 1974 which modified the common law rule and allowed individuals to create a “durable” power of attorney. Pennsylvania law was modified a number of times thereafter and now provides[1] that unless specifically provided otherwise in the power of attorney, all powers of attorney shall be durable as provided in section 5604of Title 20 (durable powers of attorney). Section 5604 says:
§ 5604 Durable powers of attorney
Definition.--A durable power of attorney is a power of attorney by which a principal designates another his agent in writing. The authority conferred shall be exercisable notwithstanding the principal's subsequent disability or incapacity. A principal may provide in the power of attorney that the power shall become effective at a specified future time or upon the occurrence of a specified contingency, including the disability or incapacity of the principal.

Durable power of attorney not affected by disability or lapse of time.--All acts done by an agent pursuant to a durable power of attorney during any period of disability or incapacity of the principal have the same effect and inure to the benefit of and bind the principal and his successors in interest as if the principal were competent and not disabled. Unless the power of attorney states a time of termination, it is valid notwithstanding the lapse of time since its execution.
As noted in Section 5604, a principal may provide in the power of attorney that the power shall become effective only upon the occurrence of the disability or incapacity of the principal. That type of contingent POA is typically referred to as “springing.”
Both Pennsylvania law and the Uniform Act[2] now provide that a power of attorney is presumed to be durable unless the document states otherwise. No special language is required. Nevertheless, it is wise to include a specific statement to that that the agent’s authority survives the principal’s incapacity. Although all states now allow durable powers of attorney, some require such specific wording in the document.  
Here are links to additional information on powers of attorney:

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