The "durable" power-of-attorney is unlike the ordinary power-of-attorney which becomes inoperative upon the incapacity of the principal. The durable power-of-attorney, provides that those powers granted to the agent shall not be affected by the subsequent disability or incapacity of the principal or by the lapse of time. It is invalid for deceased Principals however.
Most powers-of-attorney become effective immediately upon execution by the principal. Many principals, however, are justifiably wary about giving a currently exercisable power-of-attorney to the agent. Accordingly, most states allow a durable power-of-attorney to be drafted in such a way that it becomes effective only upon the principal's disability. Such a legal instrument is called a "springing" power-of-attorney, signed when the principal has capacity and not effective until the occurrence of a triggering event such as the onset of disability of the principal. The primary disadvantage of the use of the springing durable power is that because its operation is triggered by disability, the occurrence of the event may have to be conclusively established to the third person in order to induce such person to accept the authority of the agent. The document, therefore, should contain a clear definition of the term "disability."
- The power to change the principal's domicile to another state where the Medicaid eligibility rules are more favorable. · The power of access to safe-deposit boxes.
- The power to renounce or disclaim an inheritance and/or insurance proceeds.
- This power could be another powerful estate and Medicaid planning tool where not prohibited under state law.
- The ability to sign tax returns, IRS powers-of-attorney and the power to settle tax disputes.
- The power to settle, pursue or appeal litigation on behalf of the principal.
- The power to deal with and collect proceeds from health and/or long-term-care insurance.
- The power to set up and fund trusts and the power to amend existing trusts.
- The power to revoke or amend the power-of-attorney itself.
This is a smart way to provide flexibility for individuals seeking to ensure an effective distribution of their estates.