When people think about estate planning, they often focus on what happens after they’re gone — wills, trusts, and asset transfers.
But just as important is preparing for situations that may occur while you’re still living. A durable power of attorney is one of the most essential documents for that purpose, yet it’s frequently misunderstood or overlooked.
A durable power of attorney is a legal document that grants someone else the authority to act on your behalf in financial and legal matters. The person you appoint is often referred to as your “agent” or “attorney-in-fact.” This authority can cover tasks like paying bills, managing bank accounts, handling investments, or signing legal documents. The goal is to ensure that if you ever become unable — or simply unwilling — to manage these responsibilities yourself, someone you trust can step in smoothly.
The term durable is key. It means the power of attorney remains valid even if you become incapacitated. That makes it distinct from a non-durable power of attorney, which only takes effect after a doctor determines you’re no longer able to make decisions. For most families, the durable version provides greater flexibility and peace of mind because it ensures that help is available at the moment it’s needed.
This legal document proves to be valuable for several reasons. Many people find that as they age, tasks like managing finances or paying bills become more difficult. Others face health issues such as cognitive decline, Alzheimer’s, or Parkinson’s disease that can limit their ability to handle complex decisions. Having a durable power of attorney in place prevents gaps in financial management and helps loved ones avoid the stress of seeking court approval to act on your behalf.
It’s important to understand both the power and the limits of the role. A power of attorney can handle most financial matters, but cannot change beneficiaries, alter a trust, or make significant legal changes unless that authority is specifically granted. Additionally, this document becomes void upon the death of the person who created it — authority does not continue beyond that point.
For families who also have a trust in place, it’s helpful to coordinate these roles. A successor trustee has similar authority but can act both during your lifetime and after your death. Aligning your trustee and power of attorney can make managing your affairs simpler and more consistent if you become incapacitated.
When selecting whom to appoint, consider someone who knows you well, communicates with you often, and has the ability to act responsibly on your behalf. For married couples, it’s common to name a spouse first and an adult child or trusted friend as a backup. Because this is a deeply personal role, it’s usually better suited for individuals rather than institutions.
Finally, keep in mind that powers of attorney are state-specific. If you move to another state, you should update your document to comply with local laws. This simple step helps ensure your wishes are honored no matter where you live.
A durable power of attorney may not be the most glamorous part of estate planning, but it’s one of the most practical. Having it in place ensures that your financial life continues seamlessly if you can’t manage it yourself — protecting both your independence and your peace of mind.
Financial Enhancement Group is an SEC Registered Investment Advisor.
