A will takes effect when you are gone. A durable power of attorney takes effect when you are alive but cannot decide: an accident, a surgery, dementia. Without one, your family would have to ask the court to declare you incapacitated and appoint a guardian, a long, costly, and painful process, just to pay your bills or make decisions about your property.
What is it?
It is a power of attorney signed before a notary in which you designate a trusted person (the agent) to act on your behalf and which, unlike an ordinary power of attorney, remains in effect even if you lose the capacity to make decisions. That is its essential feature and the reason for its name.
What can it include?
- Managing bank accounts, payments, and collections.
- Managing, renting, or selling property.
- Representation before Hacienda, CRIM, Social Security, and other agencies.
- Decisions about your business: signing contracts, paying payroll, running day-to-day operations.
- Medical and care decisions, if you choose, or in a separate advance directives document.
You decide the scope: broad or limited to specific matters. You also decide when it applies: immediately or only when a physician certifies that you cannot make decisions.
Why is it urgent for a business owner?
If the owner of a small or medium-sized business becomes incapacitated without a durable power of attorney, no one can sign the payroll check, renew the lease, or negotiate with the supplier. The business comes to a halt just when the family needs it most. A well-drafted durable power of attorney, together with a partner agreement, keeps the business running.
Whom should I name?
Someone you trust completely, who is organized and available. It does not have to be your closest relative; it has to be the most capable one. Always name a substitute and, if you wish, require them to report to another person.
How is it executed and revoked?
In a public deed before a notary, with notice to the Powers of Attorney and Wills Registry. As long as you have capacity, you can modify or revoke it whenever you wish. It ends at death: from that moment, the will takes over.
Common mistakes
- Thinking your spouse can automatically act for you. That is not the case for many acts.
- Signing an ordinary power of attorney believing it is durable. An ordinary one ends with incapacity.
- Making it so broad that no one supervises it, or so limited that it is useless when needed.
- Not telling your family where it is and who the agent is.
This article is educational and does not constitute legal advice. Each situation must be evaluated individually.