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In this blog post, we discuss the basics of a durable power of attorney. A durable power of attorney (POA) can be one of the most flexible and powerful estate planning tools. This type of legal document allows one individual, called the “principal,” to designate another person, known as the “agent” or the “attorney-in-fact,” to make a variety of decisions on the principal’s behalf. A power of attorney is considered “durable” if it remains in effect if the principal is unable to make informed decisions or manage their own affairs. Ohio recognizes two types of powers of attorney. The first type is referred to in the state’s code of laws as simply a “power of attorney” – but some people may also call this type a financial power of attorney, in reference to the types of actions and decisions a power of attorney generally authorizes its agent to make. The other type is a durable power of attorney for healthcare, which is sometimes also called a “medical” power of attorney. Both types of documents are considered “durable” in Ohio unless otherwise specified, but only the power of attorney for healthcare must be durable in order to function.
In most contexts, to call something durable is to say that it holds up well under rough handling, or that it lasts a long time (or even that it can last a long time under rough handling). A durable pair of scissors has blades and handles that will not easily break, and a central pin that can be counted on to hold securely over many thousands of snips. A durable pair of running shoes may protect the wearer’s feet from the surfaces of road or trail for hundreds of miles before the treads wear smooth, the inner arch supports lose their resilience, and the upper begins to fray or separate along its seams. In reference to a power of attorney, however, durable has a somewhat narrower meaning than most people are used to seeing or hearing in everyday use. Estate planning lawyers use this word to distinguish between different types of power of attorney.
In some states, unless the power of attorney document explicitly includes a provision establishing durability, generally speaking a POA will automatically expire or become inactive if for any reason the principal is incapacitated. The rule in these states is intended to provide a built-in “failsafe” of sorts, to protect individuals who may have granted someone power of attorney for the purpose of managing a limited set of business matters, but in the expectation that the principal would be able to regularly communicate with the agent and issue directions or revoke the POA, either once the matters for which the power of attorney was put in effect have been resolved or when the principal decides, for whatever reason, to resume sole management of their own business affairs. With a non-durable POA, if the principal becomes incapacitated due to illness or sudden accident, the agent’s authorization to act as the principal’s attorney-in-fact is immediately withdrawn – preventing a mechanism whereby an unscrupulous attorney-in-fact might otherwise seek to take advantage of the principal’s inability to monitor the agent’s decision-making and intervene in defense of their own interests.
In states where powers of attorney are non-durable unless otherwise specified, individuals preparing a POA can avoid an otherwise automatic inactivation by including a “durability” provision, explicitly stating that the power of attorney is to “endure” until any of the following occurs:
Even though the Ohio Bar Association explains that, under the Ohio Revised Code, all powers of attorney are considered durable unless otherwise specified, § 1337.12 uses the language of “durable power of attorney for health care” throughout. For non-medical powers of attorney, O.R.C. § 1337.24, providing that a power of attorney executed in the state is durable unless otherwise specified, prevails. If you have questions about the durability of your power of attorney documents, or which types of power of attorney you need, an estate planning lawyer with Rhodium Law may be able to review your situation and help you to evaluate your options.
Often a power of attorney for health care is not only “durable,” but also “springing.” As the National Council on Aging explains, a springing power of attorney is one which is activated only at a predetermined date (identified in the document) or, more usefully for medical purposes, when a certain set of circumstances apply.
O.R.C. § 1137.29 establishes that a power of attorney executed anywhere in the state will be valid once executed unless the document identifies either a future date or contingency. Because a medical power of attorney is typically used as a means for the principal to designate a healthcare proxy to make decisions regarding the principal’s medical care if and when the principal is unable to make those informed decisions on their own behalf, in many cases the instrument for a medical POA will specify that the agent’s authority will become active only in the event that the principal is declared “incapacitated” – after which point, if the POA is also durable, it will remain in effect until ended by death, revocation, or the expiration date.
Another way of understanding the different types of power of attorney comes into play here. Besides the durable vs. non-durable distinction, powers of attorney may also be understood in terms of the types of decisions the attorney-in-fact is authorized to make, or the kinds of business the agent is empowered to conduct. The centrality of the durability clause to a medical power of attorney, and the relative infrequency with which POAs are constructed to be “durable” otherwise, can even lead some people to use “durable power of attorney” and “health care power of attorney” interchangeably – but in fact, as indicated by Cornell Law School’s Legal Information Institute (LII), individuals preparing a power of attorney instrument typically have the right to include a durability provision, if they so choose.
The potential disadvantages of a durable power of attorney may differ somewhat, depending on the types of power of attorney. One of the most obvious risks of a durable financial power of attorney is the opportunity for abuse, particularly of an individual who is elderly or incapacitated (or both). Less simplistically, the agent entrusted to make financial decisions and carry out financial transactions on the principal’s behalf may make poor decisions in good faith. Not everyone who is trustworthy in terms of their good intentions is possessed of stellar financial acumen.
Durable power of attorney importance in medical settings can of course not be overstated. If anything, it is in decisions related to the healthcare preferences of an individual who is not able to assess all of the available information and make and communicate an informed decision, or advocate on their own behalf, that this powerful and highly adaptable estate planning tool shows its true value. However, it is also in the context of incapacity planning for healthcare that the enormous responsibility of a medical POA agent, along with the corresponding scope of the trust the principal must place in them, becomes clear. A mistake in choosing a healthcare proxy can easily leave an individual completely helpless and at the mercy of a decision-maker who, whether through malice or ineptitude, may not serve the principal’s best interests – a truly tragic situation.
A durable power of attorney is a crucial element of a comprehensive estate plan. Thanks to their substantial flexibility and the several types of power of attorney available, these estate planning tools can be highly customizable, and individuals may choose to draft a single durable power of attorney or, on the other hand, they may opt to create separate powers of attorney for financial matters vs. medical decisions. An estate planning lawyer who understands your situation and is experienced in Ohio power of attorney laws may be able to advise you concerning options for power of attorney that might fit your needs.
The team at Rhodium Law appreciates the importance of a durable power of attorney, and the impact that making wise choices in power of attorney can have on our clients’ long-term comfort and current peace of mind. Reach out to us today by calling (216) 699-8145 or request a consultation.
