Durable Power of Attorney: Power to Protect Your Assets
The durable power of attorney is a fundamental tool to protect your assets. It allows you to name an agent to handle your assets, if you become ill, incapacitated, are traveling or unavailable for some reason. Even assets held in joint tenancy or community property requires the signature by both owners, and if either owner is incapacitated, then the other owner would be unable to make a necessary sale.
When you prepare a power of attorney, you are referred to as the "principal." A power of attorney is “durable” if it remains effective even if the principal becomes incapacitated. In order for a power of attorney to be durable, A.R.S. §14-5501 requires that it provide similar language to the following: “This power of attorney is not affected by subsequent disability or incapacity of the principal or lapse of time.” The principal can still revoke and change the power of attorney at any time, as long as the principal has capacity; i.e., he understands the consequences of his actions and his finances.
The person you name to assist you with finances is your "agent." The durable power of attorney should list an alternate agent in case the person you list first cannot serve. For example, if you list your spouse as your agent, but your spouse is ill too, then you need an alternate agent.
Durable powers of attorney can be made contingent upon your incapacity. That is, the agent cannot act until you are declared incapacitated. This is not advisable because once you are declared incapacitated you lose the right to make decisions, including the ability to change your agent.
For most people, they will need an agent's help before they are incapacitated. Therefore, if the durable power of attorney is immediately effective, then the agent can be of assistance during short term illnesses or simply to deal with difficult billing departments when you might not have the strength to do so.
Durable powers of attorney are necessary even if a person holds his assets in trust. For example, access to retirement plans, like an IRA, can only be obtained by an agent under a power of attorney, not a trustee. Also, the providers of services for health or personal care needs often require the signature of an agent and not a trustee.