WHAT'S THE DIFFERENCE BETWEEN A DURABLE POWER OF ATTORNEY AND A REGULAR ONE?
For starters, all powers of attorney are simply written documents whereby you authorize someone to act on your behalf. For example, a mother may name her daughter to act for her. However, if your power of attorney is not "durable", you may find that the power of attorney is useless when it is needed most.
The "durable" power of attorney is exactly identical to the regular power of attorney except for one crucial difference. The difference has to do with whether the powers remain effective after the onset of a disability. That is, the regular power of attorney ceases to be effective if you become disabled, whereas the "durable" power of attorney continues to be effective despite your subsequent disability. The reason for this difference comes from the old English common law where there was no such thing as a "durable" power of attorney. At common law, if you signed a power of attorney naming someone to act on your behalf, they would have this authority only for as long as you remained competent. If you later became disabled or incompetent, the power of attorney was automatically revoked---they were not "durable".
Recognizing that it would be extremely beneficial if the power of attorney would remain effective even if you later became physically or mentally incapacitated, the various states passed laws to change the old common law. Generally, these new laws allow for the creation of a "durable" power of attorney by simply adding special language designed to make it clear that the powers are not be effected by your subsequent disability.
Pennsylvania has recognized the durable power of attorney for quite some time. However, all written powers of attorney in Pennsylvania are now presumed to be durable unless you specifically provide otherwise. As such, the law has come full circle in Pennsylvania and special language is now needed only if you want a "non-durable" power of attorney.
While the durable power of attorney has always been a relatively easy way to deal with a potential disability, it does have its drawbacks. The chief problem is that there is no guarantee that third parties, such as banks or brokers, will honor the power of attorney. This is especially the case if there has been a long passage of time since the power of attorney was signed. Fortunately, the current Pennsylvania law addresses this problem.
Pennsylvania law now states that if you rely on a power of attorney in good faith, you will not incur any liability if you follow the instructions of the person given the powers. Likewise, unless you have "reasonable cause" to ignore the instructions, you can be liable for damages if you fail to comply with the instructions of a person acting under a power of attorney. With these changes, powers of attorney should now be accepted with little hesitation and, therefore, be even better disability planning tools.
All contents Copyright © Robert Clofine 1996-98