A Durable Financial Power of Attorney (DFPOA) form is a legal document that identifies another person as being able to make financial decisions on your behalf should you become unable to make the decisions yourself. The “durable” means the power granted in the document remains in force should you become incapacitated. A POA that is not “durable” becomes ineffective at the time you become incompetent. This is like a Durable Medical Power of Attorney, only it deals with financial decisions, not medical decisions. The person you identify to make decisions on your behalf is referred to as your agent, and he/she is required to act with your best interests in mind, and must avoid conflicts of interest.
Your DFPOA form can specify that it takes effect when signed, or in the event you become incapacitated. The document may also speak to specific financial actions your agent can or cannot make. Examples of decision making abilities include:
- Use your money to pay everyday expenses
- Manage your retirement accounts
- Pay taxes
- Buy insurance for you
- Transfer property
- Invest your money in stocks, bonds, etc.
- Collect Social Security or other government benefits
A DFPOA form can sometimes be obtained from financial institutions, but elder attorneys will provide assistance, or you may be able to find a standard form from your state’s Attorney General’s Office. You can find your Attorney General’s contact information by visiting the Resources by State page. I would advise against using any free, standard form available online unless it’s from a reliable source and is written specifically for the state in which you reside. The document will almost certainly need to be signed in front of and by a Notary Public.
If you do not have a DFPOA and someone has to make financial decisions for you, court proceedings may be required. Having such a document in place saves your family a lot of work if it is ever needed. If you anticipate the potential need for a DFPOA, you may also consider putting a Durable Medical Power of Attorney and/or a Living Will in place at the same time.
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Hi, This is excellent advice. There is one caveat/frustrating thing I can add to it. I have the durable power of attorney and have used it and appreciated it many times. Unfortunately, many businesses don’t accept it. They want their own. This is especially true for banks and financial institutions. So be sure to ask at each place your aging parent does business to see what their requirements are. Then you’ll be prepared :)