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Sunday, November 14, 2010

Basics of Enduring Power of Attorney

Recently a reader asked me to explain an Enduring Power of Attorney, so I'll do that in this post. An Enduring Power of Attorney (EPA) is known in different places as a Durable Power of Attorney or Continuing Power of Attorney, but the basic principles are the same.

The main purpose of an EPA is to appoint someone to make decisions about property and finances if you are alive but no longer able to do that for yourself. You might be unable to make your own financial decisions if you have been injured, if you are ill, or if you are suffering from dementia such as Alzheimer's disease. The word enduring, continuing or durable refers to the fact that the document endures through the loss of mental capacity.

An EPA is usually made at the same time as a Will, as most of the time it is a planning document that is made well ahead of the time it is needed. The kind that are made ahead of need are known as springing EPAs because they spring into effect when they are needed. They are triggered by a mechanism described in the EPA itself, such as a written declaration by a doctor. Many people make these documents in their 40s and 50s, even though they don't anticipate needing them for years.

An EPA can also be made to come into effect as soon as it is signed, which is known as an immediate EPA. These are made less often, and are designed to allow a helper to step in right away rather than waiting until the person loses capacity. In my practice, I have seen this most often when an elderly person is experiencing the early signs of dementia and wants some help with banking or other other financial transactions.

An EPA can also contain guidance as to how the person would like financial matters to be handled. For example, it can contain instructions about investments, or a direction that the helper continue to use the same financial advisor. It can direct the helper not to sell or dispose of assets that are going to be specifcally dealt with in the person's Will. It can give permission for financial transactions that might otherwise have to be discontinued, such as payment of college tuition for a student who is not a minor, or the payment of cash gifts on birthdays.

Your EPA document conveys an enormous amount of power to the person you name, so the person or people you select must be chosen carefully. Don't assume that the mere fact that someone is related to you makes them a good choice. You may name one person, or two together. If you name only one, you should name an alternate who may act if your first choice has passed away or refuses to take on the job.

Your EPA, once brought into effect, stays in effect unless you revoke it, make a new one, or you pass away. It is not revoked by divorce or separation.

2 comments:

  1. What an information-packed blog sheesh!

    I do have a question however, can any type of power of attorney document be durable? Like can I have a Durable Heath Care Power of Attorney Form?

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  2. Curious, can a lawyer who holds the appointed Power of Attorney documents let other parties who are not family know who the power of attorney appointments are and to then let that individual influence who should be appointed as EPA? I would think this is a breach of confidentiality on the part of the lawyer.

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