What is a Durable Power of Attorney?

By Ryan W. Collier

A Durable Power of Attorney (DPA) is a legal document that grants authority to an agent to act on your behalf on a variety of issues, including financial matters, property management, and government benefits. A DPA is a valuable tool for assisting a person during disability, but can be a dangerous weapon in the wrong hands. On one hand, a DPA allows a person to delegate to another the power to manage his or her affairs regardless of the principal’s disability or incapacity. This power is very personal and individual. Knowing that daily operations can be handled if disability occurs can be a great source of comfort and relief for a client. On the other hand, giving someone complete control over your daily life creates a significant risk of abuse. Thus, a client should use care when granting a power of attorney to an agent.

When preparing a DPA, a client should take into account the abilities of the proposed agent, the level of trust between the principal and agent, and the circumstances that trigger the use of the DPA. The client must make decisions on whether the DPA takes effect immediately or upon disability, whether to grant authority to make gifts, and whether the DPA limits the agent’s authority by time or scope. Answers to these questions will depend on the circumstances of each client.

In addition to considering the effective date, gift powers, and scope of the DPA, the client should consider two statutes that affect its use. First, a power of attorney is not revoked at the instant of death, but at the time when the principal’s death becomes known to the agent or third party. ORS 127.015. Agents acting in good faith under a power of attorney without knowledge of the death of the principal bind the principal and heirs, and personal representatives. Any third party who has not received actual notice of revocation of a power of attorney or death of the principal is not liable for actions taken in reliance on the power of attorney. Second, a person may not refuse to honor a power of attorney based on the passage of time since the power of attorney was executed. ORS 127.025. In my practice, I occasionally deal with financial institutions that refuse to honor an otherwise valid DPA that is more than two years old. A reference to the statute generally resolves the matter.