Absolutely everything!

A durable power of attorney (DPOA) is the most powerful tool for planning for incapacity.  It is much more powerful than a Last Will and Testament or regular Power of Attorney and should be considered a foundational part of any estate plan. The DPOA is a document that is relevant at any age but is especially necessary for older people who are more susceptible to mental deterioration. Problems begin when a person is incapable or unable to make financial decisions for themselves. A person may be unable to make these decisions because of the onset of dementia, being in a coma, or suffering from a head injury. Mortgages, car payments, medical bills, and other obligations still need to be addressed during these times. Moreover, an individual may need to make decisions about public assistance like Medicare, Medicaid, or Veterans benefits. It is not always the case that a close relative can legally deal with these issues and most financial institutions will not even speak with a relative without a properly executed power of attorney. It can cost thousands of dollars in legal fees and waste tremendous amounts of time in the courts to be granted the authority that a power of attorney provides.

The process to create a DPOA is straightforward but should be done by a Florida attorney. DPOAs are authorized by state statute and in Florida must be very specific when it comes to the powers granted to the attorney in fact. Generally, the scope of an agent's power is defined within the DPOA document itself. Powers cannot be assumed; they must be explicitly granted within the DPOA. Essentially, the person granting the DPOA appoints an agent to act on their behalf for financial affairs. Typically, the agent is authorized to access the person's accounts, pay bills, sell property, or take any number of other actions, up to and including accessing online accounts, including social media. This access assumes the person has created and maintained a password vault of some for – that's a topic for another day!

It is critically important that any DPOA be, well, durable. A durable power of attorney survives the person's incapacity. There is usually language that must be included such as, “This power of attorney shall not be affected by subsequent disability or incapacity of the principal.” A regular power of attorney will not be effective when the person is incapacitated absent language in the document to the contrary.

There are two basic options for when the document is effective. First, the document could be effective immediately upon signing, even though the client is still lucid and capable (which, of course, they must be to effectively execute the DPOA). People are often surprised by and uncomfortable with this option. The document does in fact authorize the named agent to take any number of financial actions on the person's behalf. The key to alleviating this concern is to only give this power to someone that is, without a doubt, trustworthy. It is a good idea to have the named agent execute an acceptance document. The original DPOA document itself should be secure until it is needed.

The alternative to an immediately effective power of attorney is a springing power of attorney. A springing power is effective—springs to life, as it were—upon a future event identified in the document, such as the person's incapacity. Under a traditional springing power, the agent has no authority to act unless and until the person becomes incapacitated. However, a springing power can be significantly more difficult for an agent to administer because they must first provide medical evidence of the person's incapacity, especially for financial institutions.

As with any appointment of an agent, there are potential pitfalls to consider in executing a DPOA. First and foremost, DPOAs provide broad authority that could be abused by the named agent. The potential for abuse grows with the scope of authority. Can the agent give a gift to themselves under the document? Can they change payable on death (POD) beneficiary designations on accounts? A person must carefully consider what powers to grant to the agent, and the person must fully understand the scope of authority given to the agent.

With those caveats in mind, a DPOA should be part of most, if not all, estate plans prepared for a person to ensure that the agent can easily act if the person becomes incapacitated.