Many clients ask: “what are the advantages and disadvantages of a durable power of attorney?” A power of attorney is a legal document that gives one person the authority to act on behalf of another. The most common purpose of a power of attorney is to handle legal, financial or medical needs for someone else. A durable power of attorney remains in effect even after the person becomes incapacitated. As with most things, a power of attorney has its advantages and its disadvantages, which should be weighed by each person before making the decision to create one.
The Advantages of a Durable Power of Attorney
A durable power of attorney is a relatively easy, inexpensive way to give someone the ability to manage your affairs. Unlike a joint bank account, a durable power of attorney does not give the agent access to the principal’s assets for the agent’s own use. Also, a durable power of attorney automatically terminates upon the principal’s death. This means your assets will remain with your estate.
With a durable power of attorney, the principle is able to decide who will serve as their agent and make decisions on their behalf, instead of a court making that decisions for them. The principal can control whether the agent has general or specific power. The power of attorney document can also contain language that requires the agent to become bonded or give an account of his or her transactions.
The Disadvantages of a Durable Power of Attorney
Even with all of its advantages, ultimately the power of attorney will give your agent full legal authority to act for you. Therefore, it is critical that you choose someone you know to be honest and trustworthy, and whom you are confident will act only in your best interest. You will not have direct control over your agent’s actions because he or she will have the authority to enter into transactions for you, without you being present. Despite the agent being required to follow your directives, it is always a possibility that your agent may make mistakes or, regrettably, use their authority to commit fraud against you.
Finally, if a durable power of attorney is revoked for any reason, it is imperative that all third-parties with whom the power of attorney has been used be notified of the revocation. Otherwise, the bank or mortgage company will continue to deal with your agent as it always has. Without prompt notice that the power of attorney has been revoked, your agent could continue to make transactions on your behalf and the bank would not be held liable for any unauthorized transactions.
If you have questions regarding a durable power of attorney, or any other estate planning needs in Fayetteville, please contact Wilcox Attorneys, PA online, or by calling us at (479) 443-0062.
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