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A durable power of attorney for financial decisions is a document that appoints the person you wish to make financial decisions for you in the event you are unable to do so.  The maker of a power of attorney document is referred to as the "principal", and the person appointed to represent the principal is called the "agent" or "attorney-in-fact".  A "durable" power of attorney survives a principal's incapacity, meaning the document remains valid even if the principal later becomes incapacitated.

Without a valid durable power of attorney for financial decisions, if you become incapacitated, frequently the only way to handle your financial affairs is to have you declared an adult with an impairment in need of a conservator through the courts and have the court appoint a conservator to manage your finances. Thus, a durable power of attorney for financial decisions can be an important first step in keeping your affairs out of the court system.

Frequently, durable powers of attorney for financial decisions do not have expanded powers to deal with long-term planning, either from a Medicaid standpoint or from a VA pension standpoint.  These expanded powers can be extremely important in protecting you and your assets in the event you have to enter an assisted living or nursing community.  If your durable power of attorney for financial decisions does not contain these expanded powers, you should consider updating your document.

Durable powers of attorney can be either springing or immediate.  A springing power of attorney is a document that becomes effective only upon your subsequent disability or incapacity and typically required a certification of incapacity by one or more licensed physicians.  Suppose, for example, you were laid up in the hospital following a surgery and needed a loved one to handle a matter for you at the bank.  The loved one would likely be unable to obtain a physician's certification of your incapacity, and would, thus, not be able to use the power of attorney to assist you.  The solution to this problem is to implement a power of attorney that is effective immediately upon signing and that does not require a physician's certification of incapacity.