What Is Durable Power of Attorney?

Definition and Example of a Durable Power of Attorney

A durable power of attorney is a document that establishes who is in charge of your health or financial decisions. This named “agent” can continue to be so if you become disabled or incapacitated since the power of attorney remains in place until your death or the order is revoked.

• Acronyms: durable POA, DPOA
• Alternate names: durable power of attorney for health care, durable financial power of attorney

Let’s say your mother tests positive for COVID-19 and is hospitalized. She falls into a weeks-long coma. Her mortgage payment will soon be due, which she always pays by check. In her durable power of attorney, she named you as her agent. This allows you to withdraw money from her bank account and pay her mortgage, acting on her behalf.

How a Durable Power of Attorney Works

A durable power of attorney form names the individual or agent you’ve empowered to work on your behalf. It may also name alternate agents if your agent isn’t available.

A power of attorney can be helpful if you can't or don't want to make decisions. "For example, if you don't want to deal with your bills, you're saying, 'You can make those decisions for me, even if I still have the capacity,' " Carmen Rosas, a Bay Area-based lawyer with more than 10 years of experience in estate planning, told The Balance by phone.

“Durable” refers to the agent's power continuing after your incapacitation. "If a power of attorney is missing that one word, 'durable,' it doesn't continue," Rosas said.

The definition of “incapacitation” may vary by state. For example, in Texas, incapacitation means that a physician examines and provides a written statement indicating the person can’t manage their finances.​

Your agent essentially can act as you, so it’s important to think about the best person for the role. "If you're giving someone this power, you must trust them to make the right decisions for you. It's important that the person you're picking is reliable," Rosas said.

Many people are surprised that the agent's powers cease working when the principal dies. Different documents are needed to deal with after-death circumstances, Rosas said. "People think that the durable power of attorney authorizes them to make decisions after death, but you need a trust or will to manage property or other assets after death. A power of attorney dies with the person."

Types of Durable Power of Attorney

There are two primary types of durable power of attorney: financial and health care. Your state law determines whether durable power of attorney covers health decisions or if you must use another form. The powers provided can vary by state, and some terminology can differ.

In some states, such as Michigan and Washington, there’s a durable power of attorney form for health care and for finances. In California, Texas, and Alaska, the durable power of attorney form allows the agent to make only financial decisions, not health care decisions. Appointing a health care agent or proxy is accomplished in a different form.

Financial Durable Power of Attorney

The financial power of attorney is a document that appoints an agent to act on your behalf, even if you are disabled or without capacity. This agent handles your money, property, and other assets or belongings.

You may be able to select some expected financial powers the financial POA has. Powers might include:

• Selling your property
• Banking on your behalf
• Removing items from your safe deposit boxes
• Selling or exchanging your stocks

Health Care Durable Power of Attorney

A health care or medical power of attorney designates someone who can make health care decisions for you if you can’t speak, are in a coma, or are disabled. This person may be called an agent or a proxy. This person can evaluate health care decisions based on specific circumstances, but you can often include your general wishes or direction in the POA.

The POA might include the agent’s ability to:

• Access to your medical records, releases, disclosure
• Organ donation consent
• Ability to sign forms on your behalf
• Manage your remains

How To Get a Durable Power of Attorney

The health care power of attorney form may stand alone or be part of an advance directive package or living will.  Rosas said some states have statutory forms for power of attorney, which work like "fill in the blank" paperwork for your wishes.

The American Bar Association (ABA) advance directive resource for all 50 states may include durable health care power of attorney. The ABA’s MYLO app stores health care advance directives, medications, physician contacts, and other medical information.

However, Rosas said statutory forms might not allow you to tailor your financial or health care durable POA to your situation. It can also be easy to misunderstand legal language or not execute it the right way. "Talk to an elder-law attorney, or at least ask an attorney to review it," Rosas said.

Check your state’s law to find out what makes a power of attorney valid, requiring witnesses, signatures, and notarization. For example, in Washington, some banks and government agencies require notarization for durable power of attorney for finances.

To revoke a durable POA, Rosas said you'd need to meet the same standards to meet any execution formalities, such as witnesses or notarization. Generally, the durable POA ends when the principal dies or revokes a power of attorney, a guardian was appointed for the principal, or other conditions were satisfied.

Your lawyer could also add a requirement ending durable power of attorney if your agent is your spouse or partner and one partner files for divorce.

Alternatives to a Durable Power of Attorney

If you don't fill out a durable power of attorney and someone petitions the court to declare you incapacitated, the court will appoint someone to manage your affairs, Rosas said. "You either prepare with documentation or your family deals with the court system. This is take-your-vitamins, preventive medicine."

Rosas encourages all clients over age 18 to have a durable POA for medical and financial affairs. "Many people think their family knows what they want, but when emotions run high in the hospital, it can be hard for siblings to agree without a document in place. You'll have to head to court to see who gets the final say."

Want to read more content like this? Sign up for The Balance’s newsletter for daily insights, analysis, and financial tips, all delivered straight to your inbox every morning!