You Are Not Invincible - And Neither Is Your Durable Power Of Attorney

Don’t mistake “durable” for “invincible.” Several times in the past year I have been asked whether a durable power of attorney is still effective after the death of the principle. The answer is no – sort of.

A durable power of attorney (“DPOA”) terminates when the death of the principal becomes known to the agent. See MCL 700.5504.

While the principal is still living, a DPOA allows for the management of the affairs of a principal who has become incapacitated. This is a powerful tool, but it must be created before the principal suffers the onset of the disability, as at that point it is probably too late for the principal to have the capacity to sign a valid DPOA.

What are the alternatives to a DPOA? If property is owned in a trust, under many circumstances a successor trustee can take over during a period of incapacity. For property outside the trust, though, this would not be effective. The other alternatives to a DPOA are a judicial guardianship or conservatorship. These involve judicial oversight and creation, and are generally far more costly and less desirable alternatives.

While many people understand the reality of their own mortality, they do not consider the likelihood or even possibility of their temporary incapacity, and thus they overlook incapacity planning as part of their estate plan. However, incapacity planning is an important part of estate planning and a DPOA is a document that should be included in most estate plans.

Now a word of caution. This is not a document to be drafted without professional counsel. Care must be taken in drafting the DPOA not only to assure that it is effective and controlling when it is needed, but also to include restrictions as appropriate to avoid unintended tax consequences.

This is a good time for me to restate the important restrictions noted at the top of the blog – I cannot, and by way of this blog I do not, offer legal advice without knowledge of all of the relevant facts. This blog does not provide create an attorney-client relationship and does not provide legal advice. It is designed solely to raise issues that merit further discussion and exploration. It is of utmost importance that you contact your own attorney before taking, or refraining from taking, any action that can affect your legal rights.