Power of Attorney is a written document used by an individual to appoint or authorize another person to act or represent themselves during financial transactions. The person who is granted power of attorney can act or perform certain functions on behalf of the person making the document, also known as the principal. Durable Power of Attorney is another term used under certain circumstances. There are many similarities between power of attorney and durable power of attorney, but there are also differences between the two.
Power of Attorney
Power of attorney is a powerful tool that allows a person to appoint another person to act on their behalf under certain circumstances. There can be situations when a person is unavailable or ill and unable to make decisions. Power of attorney enables one to have another person act on their behalf. This person steps into your shoes and becomes your agent. They are authorized to sign checks on your behalf, file your tax returns, and even sign business contracts when you are abroad or ill and hospitalized for some time. They can run your business, deposit and withdraw funds from your bank account, and do virtually everything related to finances as long as they hold your power of attorney.
Durable Power of Attorney
If you appoint someone to act on your behalf, you are granting them power of attorney. If you add a clause that your agent shall continue to act on your behalf in the eventuality of you suffering a physical or mental incapacitation, it becomes a durable power of attorney. Durable power of attorney remains in effect even though you become incapacitated. However, durable power of attorney ends in the eventuality of your death.
Key Takeaways
- Durable power of attorney is a special kind of power of attorney.
- Though it serves the same purpose as a general power of attorney, durable power of attorney continues to function in case of a mishap incapacitating you physically or mentally.
- Any general power of attorney can be converted into a durable power of attorney by adding a special clause to this effect.
