The next block on the Estate Planning Module is the "Durable Powers of Attorney." As you know, a power of attorney is a document that allows someone else to act on your behalf. There are basically two types of a Power of Attorney: Financial Powers of Attorney, and Health Care Powers of Attorney. The Financial Power of Attorney allows someone (called your "Attorney-in-fact") to make financial decisions on your behalf and place them into effect. The Health Care Power of Attorney allows your attorney-in-fact to make health care decisions on your behalf, if you can not do so yourself. In many instances having the proper power of attorney may be more important than having a Last Will and Testament.
Durable Powers of Attorney are particularly advisable for older people. For example, an individual can be in the pink of health today, have a stroke in the middle of the night while sleeping, and be mentally incompetent in the morning.
In most instances, a "nondurable" power of attorney becomes useless when a person becomes mentally incompetent. You could say it becomes legally void. On the other hand, a Durable Power of Attorney is worth its weight in gold, because it transcends mental incompetency. A "durable" power of attorney allows the person you designate to act on your behalf, even if you become incompetent. Obviously, it should be given only to someone you ABSOLUTELY TRUST. This is very important because the person that holds your power of attorney effectively stands in your shoes and can do the same things that you could do.
With a durable power of attorney document in place, you can frequently avoid the expense and trauma of an estate guardianship proceeding.
In some States, transfer agents are required by law to accept a properly executed durable power of attorney. Ohio does not have such a statute. In Ohio, the transfer agents may not accept a power of attorney. In most instances, however, they do accept them. They accept them, because it helps get the business transacted, and because they have generally been accepting them for a very long time. On the other hand, each transfer agent is free to set their own requirements that must be met in order for them to accept the power of attorney. Generally, this means that the power of attorney must be in writing, signed at the end, witnessed and notarized, and specify the action to be undertaken. Durable powers of attorney can get stale, especially as the transfer agents change their requirements from time to time. As a result, durable powers of attorney generally must be updated on a regular basis; usually every 5 to 7 years.