Wisconsin Estate Planning Lawyers

Durable Powers of Attorney are basic tools for planning for incapacity. Anyone who has a trusted relative or friend should sign a durable power of attorney for finances.

I. What is a Durable Power of Attorney?

  • A power of attorney is a written document in which the signer (“Principal”) appoints another person (“Agent” or “Attorney-in-Fact”) to act on his or her behalf
  • A power of attorney may be limited (a card signed at the bank appointing an Agent for one bank account) or very broad (a lengthy document authorizing the Agent to do anything the Principal could do). A broad power of attorney is necessary in planning for disability.
  • The problem with a non-durable power of attorney is it becomes void if the Principal becomes incapacitated.
  • In 1982, Wisconsin (and other states) passed the Uniform Durable Power of Attorney Act (sec. 243.07, Stats.), which allows the Principal to appoint an Agent whose authority may continue even if the Principal becomes incompetent or incapacitated. A power of attorney giving an Agent this authority is “durable.”
  • A Power of Attorney is durable if the document says it is. The usual language is “this power of attorney shall not be affected by the subsequent disability, incapacity or incompetency of the Principal.”

II. Who should be appointed as Agent in a Durable Power of Attorney?

  • An Agent should be a trusted, responsible and reasonably organized person
  • Married people often appoint a spouse as primary Agent; single or widowed people often choose a child, other relative or a trusted friend.
  • A substitute Agent, who can act if the primary Agent dies, resigns or becomes incapacitated, is advisable.
  • Naming joint agents, i.e., two agents each with authority to act, is possible. This should be done only if necessary in a particular case and only if the Principal is absolutely sure there will be no conflict between the Agents. If you appoint joint agents, your documents should probably have a method for resolving a deadlock.

III. When is a Durable Power of Attorney effective?

  • A Durable Power of Attorney is effective when the document says it is.
  • Often Durable Powers of Attorney are effective immediately and will continue to be effective if the Principal becomes incapacitated.
  • A Durable Power of Attorney can be drafted to be effective only if the Principal becomes incapacitated. This is called a “springing” or “standby” Durable Power of Attorney. A springing Durable Power of Attorney should define incapacity and state what evidence of incapacity will be required.

IV. What should a Durable Power of Attorney include?

  • A Durable Power of Attorney used in planning for disability should include both general language (“My Agent may perform each and every act which I myself could do”) and specific language, listing each and every power which the Principal gives the Agent.
  • General language alone is not sufficient for most purposes. For example, an Agent may not be able to sell real estate, transfer title to a motor vehicle, sell stock, make gifts, or forward mail unless the Durable Power of Attorney specifically gives that authority. Forms are dangerous. You should consult an attorney.
  • Special powers may be necessary, i.e., the authority to gift or the authority to carry out Title XIX planning.
  • A Durable Power of Attorney should always state the name of the drafter and be notarized.
  • It is best (and required if the Durable Power of Attorney includes a nomination of a guardian) that the Principal’s signature be witnessed by two disinterested people, one of whom may be the Notary.
  • If possible, two or three originals should be signed, notarized and witnessed.

V. How does signing a Durable Power of Attorney affect the Principal’s rights?

  • Signing a Durable Power of Attorney does not affect the Principal’s right to transact business on his or her own behalf.
  • A Power of Attorney can be revoked at any time.
  • An Agent under a Durable Power of Attorney must act in the Principal’s interest and must follow the Principal’s directions.

VI. What are the Agent’s duties under a Durable Power of Attorney?

  • An Agent under a Durable Power of Attorney has no personal financial responsibility for the Principal’s expenses or debts.
  • An Agent under a Durable Power of Attorney has a duty of loyalty and good faith to the Principal, and must act in his or her interest and follow his or her directions and wishes.

VII. When does a Durable Power of Attorney terminate?

  • The death of the Principal terminates a Durable Power of Attorney.
  • While the Principal lives, a Durable Power of Attorney continues unless the document includes a termination date, the Principal revokes the Durable Power of Attorney, or a guardian of the estate is appointed.

VIII. Why should a Durable Power of Attorney be signed?

  • If a person becomes mentally incapacitated (stroke, cancer, Alzheimer’s, etc.) and has no Durable Power of Attorney, a guardianship of the estate will probably be necessary. This is an expensive, time-consuming and emotionally difficult procedure.
  • Without a Durable Power of Attorney, even a spouse has no authority to transact business on another person’s behalf.
  • Without a Durable Power of Attorney, family members may not be able to preserve assets they are entitled to under Title XIX rules.
  • Even if assets are very limited, a Durable Power is necessary.

Limitations and Disclaimer

TO ASSIST YOU, WE HAVE PROVIDED THIS BROCHURE ON DURABLE POWERS OF ATTORNEY. THIS IS NOT INTENDED TO BE A COMPLETE EXPLANATION OF THE LAWS, RULES AND REGULATIONS AFFECTING DURABLE POWERS. THE LAWS AND RULES OFTEN CHANGE AND EACH INDIVIDUAL’S SITUATION IS UNIQUE. THIS BROCHURE PROVIDES AN INITIAL UNDERSTANDING OF THE BASIC CONCEPTS. YOU SHOULD CAREFULLY EVALUATE YOUR PARTICULAR SITUATION AND CONSULT THE APPROPRIATE PROFESSIONAL OR LEGAL ADVISOR PRIOR TO TAKING ANY ACTION.

To read more about powers of attorney, click here.