A power of attorney is a legal document that gives one person the authority to act on behalf of another. But not all powers of attorney work the same way. The two most common types — general and durable — differ in one critical way that can have a major impact on your estate plan.
The key difference
A general power of attorney becomes invalid if the principal becomes incapacitated. A durable power of attorney remains in effect even if the principal becomes incapacitated.
This single difference is why most estate planning attorneys recommend a durable power of attorney over a general one for long-term planning purposes. The whole point of having a power of attorney is to ensure someone can manage your affairs when you cannot — and incapacity is exactly when that need is greatest.
What is a general power of attorney
A general power of attorney gives your agent broad authority to manage your financial and legal affairs. This can include managing bank accounts, paying bills, filing taxes, buying or selling property, and handling other financial transactions.
A general power of attorney is useful for specific situations where you need someone to act on your behalf temporarily — for example if you are traveling abroad for an extended period or are unable to attend a real estate closing in person.
However because a general power of attorney automatically ends if you become mentally incapacitated it provides no protection in the situations where you may need it most — serious illness, a medical emergency, or cognitive decline.
What is a durable power of attorney
A durable power of attorney works the same way as a general power of attorney in terms of the authority it grants. The critical difference is that it contains specific language stating that it remains in effect even if the principal becomes incapacitated.
This durability provision makes it the preferred choice for estate planning. It ensures that your agent can continue to manage your finances, pay your bills, and handle your legal affairs even if you are no longer able to communicate or make decisions yourself.
Without a durable power of attorney your family may need to petition a court to establish a guardianship or conservatorship to manage your affairs — a process that can be expensive, time consuming, and emotionally difficult.
Which one is right for most people
For most people planning their estate a durable power of attorney is the better choice. It provides all the same authority as a general power of attorney while also protecting you in the event of incapacity.
A general power of attorney may be appropriate in limited situations such as:
- Authorizing someone to handle a single specific transaction
- Granting temporary authority while you are traveling
- Situations where incapacity is not a concern
For comprehensive long-term planning a durable power of attorney for finances combined with a separate healthcare power of attorney provides the most complete protection.
Do you need both
No — most people choose one or the other rather than both. For estate planning purposes a durable power of attorney is typically sufficient for financial and legal matters. A separate healthcare power of attorney is recommended to cover medical decision making.
What happens without either
If you become incapacitated without any power of attorney in place your family cannot automatically step in to manage your finances or make legal decisions on your behalf. They would need to go to court to be appointed as your guardian or conservator. This process can take months, cost thousands of dollars in legal fees, and requires ongoing court supervision.
Key differences at a glance
- General power of attorney — broad financial authority, ends at incapacity, useful for specific or temporary situations
- Durable power of attorney — broad financial authority, remains in effect at incapacity, best for long-term estate planning
- Healthcare power of attorney — medical decision making authority, typically durable by nature, separate from financial powers
How to make a power of attorney durable
A power of attorney is made durable by including specific language in the document stating that it survives the principal’s incapacity. A typical durability clause reads something like: “This power of attorney shall not be affected by the subsequent disability or incapacity of the principal.” Requirements vary by state so it is important to use a properly drafted document that meets your state’s legal requirements.
Key terms to know
- Principal — the person granting authority through the power of attorney
- Agent or attorney-in-fact — the person receiving authority to act on the principal’s behalf
- Incapacity — the inability to make or communicate decisions due to illness or injury
- Durability clause — language in a power of attorney that keeps it in effect during incapacity
- Guardianship or conservatorship — a court-supervised arrangement for managing an incapacitated person’s affairs
Sources
- USA.gov — Estate Planning
- American Bar Association — Public Resources
- National Institute on Aging — Getting Your Affairs in Order
This article is for general informational purposes only and does not constitute legal advice. Laws vary by state. Consult a licensed attorney for guidance specific to your situation.