Durable power of attorney is a designation by an individual, referred to as the “Principal”, to another person, referred to as the “Agent” or “Attorney in Fact”, to have unrestricted powers to handle financial activity on one’s behalf. All decisions carried out must be to the benefit of the principal and in no way can the agent profit from any transaction conducted.
How to Create a Durable Power of Attorney Form
- Step 1 – Select the person the principal would like to represent them in monetary related decision making.
- Step 2 – Select the form (recommended to choose one approved by the State) and choose the powers the principal wishes to let the agent hold. Complete the form and wait for signature until a notary public is present.
- Step 3 – Visit a notary public, one can usually be found at every branch bank in the United States. If either party has an account with the financial institution it can usually be completed at no charge. If not, they may charge a small fee.
- Step 4 – Make two (2) originals, one for the principal and agent, and make sure to keeping a safe and easily accessible place in case it needs to be used. The form is not filed with any government agency.
This form remains valid if the principal should become mentally ill or not able to think for themselves. Otherwise known as being incapacitated, it is crucial that the person who is given this responsibility be someone who can be trusted such as a family member, attorney, or close friend.
- The types of decisions that can be made include:
- Payment of bills
- Deposit/Withdraw from bank account(s)
- Change retirement accounts or 401k’s
- Buy or sell assets such as cars or real estate
- Make or pay loans/mortgages
- The form can be cancelled one of the following ways:
- A revocation form is authorized
- A new durable power of attorney document is created
- Death of the principal
Seeing as a durable power of attorney form is not kept on file at anyplace, it is recommended that if a cancellation is to occur that all public and private institutions that the principal has relationships with be notified.