Estate Planning - Durable Power of Attorney (DPOA)

What is a durable power of attorney? 

A durable power of attorney is a written instrument where you (as the “principal”) appoint one or more persons (as “agents”) to act on your behalf. An agent, for example, might be able to sign a check on your checking account, to sign a tax return for you, or buy and sell property in your name. An agent can even be provided with the legal authority to make gifts of your assets (but only if this authority is specifically set forth in the instrument).

Often, a separate document is utilized for healthcare decisions. A durable power of attorney for healthcare is a document where you, as a "principal," appoint another person, the health care "agent" to make healthcare decisions for you should you become incapable of making them yourself.  Occasionally, one instrument will be used to appoint an agent with powers and authority over both healthcare and financial decisions. Alternatively, one instrument will act as a power of attorney for healthcare and a second instrument will act as a durable power of attorney for financial and property matters.

What does “durable” mean when it comes to a power of attorney? 

The word “durable” in the context of powers of attorney means that the appointment of an agent is effective even if you become disabled or incapacitated. In this sense, a power of attorney is durable. It is not destroyed or damaged simply because you have lost the ability to make legal decisions. While you are incapacitated, your agents can be taking care of your affairs for you. In fact, this is the aim of most durable powers of attorney – to provide legal authority for trusted agents in the event you lost capacity.

A power of attorney which vests your agents with powers to manage your property or financial affairs can be drafted so that it becomes effective only upon your incapacity – if you should ever experience an incapacity. Alternatively, a financial or property power of attorney can be drafted so that it is effective immediately. The benefit to the “effective immediately” durable power of attorney is that there is no need for your agents to document the existence of an incapacity – with a note from your doctor, for example. The downside to an “effective immediately” durable power of attorney is that you may not want to give your agents authority over your affairs at the present time.

A power of attorney for healthcare, by contrast, is never effective immediately. A power of attorney for healthcare can only “spring” into effectiveness upon your later incapacity. (Sometimes, this kind of power of attorney is called a “springing” durable power of attorney.)

 How do I create a durable power of attorney? 

A durable power of attorney may be created at any time by a competent adult.  It must properly convey your intent to confer authority upon your agent to make health care decisions should you become incapacitated.  It must also be signed by you and witnessed by two individuals or a notary public.  Alternatively, you may direct another person to sign for you in the presence of the witnesses. A durable power of attorney is a complex and powerful document which confers broad authority to your agent to make important decisions in the event of your incapacity. 

Is there an approved form for a durable power of attorney for finances and property?

No. There is no statutory form for a durable power of attorney for finances and property. The best way to obtain a valid form is to consult with a South Dakota attorney.

Who should I name as my agent?

Selecting an agent should not be taken lightly. You must think carefully about who will best be able to speak for you if you become incapacitated. For some, this might be a spouse or an adult child, but you may name anyone, including a trusted friend. You may consider appointing multiple agents, successor agents, or co-agents. Your agent will be a fiduciary. There are many responsibilities and expectations of fiduciaries because of the power that they hold. You should also consider whether the agent will receive compensation for their work as your agent and how that compensation should be calculated.

What are the advantages and disadvantages to a durable power of attorney?

The primary advantages to a durable power of attorney are their relatively inexpensive cost and the ability to select the individual or individuals that you want making decisions on your behalf during a period of incapacity. With proper planning a guardianship or conservatorship can be avoided because agents can be vested with essentially the same powers. This avoids the cost and delay of a court proceeding.

The primary disadvantage to a durable power of attorney is the lack of supervision and oversight of agents. Remember – you will not be able to adequately supervise your agents because they will be acting during a period of your incapacity.

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