The basics

Durability - An Exposé

Durable Powers of Attorney - general and technical considerations

Updated 2 February 2023 · 79 min read

This page examines the concept of a durable Power of Attorney.

Part 1 - General Aspects: use; history; challenges; the global experience; importance of freedom of choice; complexities, fallacies & improvement
Part 2 - Technical Aspects: Determining when effective; remedial legislation; immediately effective & future effective Powers of Attorney; different technical approaches

Scope of Analysis

Scope of Analysis

Outside the analysis on this Wiki page:-

Powers of Attorney for commercial entities
Powers of Attorney for excluded purposes

See further Outside The Scope Of This Wiki Page below.

Part 1: General Aspects

An Introductory Description Of A Durable Power Of Attorney

In oversimplified terms, a durable Power of Attorney is:

..a Power of Attorney that operates according to its terms, irrelevant to whether or not the principal lacks capacity.

If for example, a durable Power of Attorney provides that it terminates on a certain date, or only authorize an agent to perform certain tasks when the principal has capacity, the Power of Attorney will continue to operate according to these terms, if the principal loses capacity.

Whatever a durable Power of Attorney says about when or how it may be used, the terms of a durable Power of Attorney will be applied, without regard to any common law principles that deal with other outcomes associated with the principal losing capacity, for example any common law rule that upon the principal losing capacity the Power of Attorney terminates.

The complete description of the term “durable Power of Attorney” preferred in this Wiki is set out in Part 2: Technical Aspects below.

A Durable Power Of Attorney May Be Used In Lots Of Situations

Durable Powers of Attorney may be used:-

in an estate planning context
in a specific transaction
in a risk management context

In each instance, a durable Power of Attorney is used to manage the risk that a person loses capacity.

Use In Estate Planning

A principal might use a durable Power of Attorney to authorize someone to control their commercial affairs, in the event that the principal loses capacity.

Use In Transactions

The use of durable Powers of Attorney can be invaluable, in both sophisticated and simpler transactions.

For example, if two persons were arranging the transfer of a home from one to the other, either or both persons may:-

want to properly execute a Power of Attorney themselves
require the other person to properly execute a Power of Attorney

For either person, properly executing a durable Power of Attorney is an important protection, to minimise any risk that an accident or other kind of unpredictable problem somehow prevents them completing the transaction, which could result in them suffering loss, as well as potentially becoming liable to pay damages to another party to the transaction.

As to why it might be prudent if you are entering a transaction with a person to require that person to properly execute a durable Power of Attorney before entering the transaction, having that person properly execute a durable Power of Attorney before entering the transaction ensures that if that other person has an accident or loses capacity for any other reason, the transaction remains capable of being completed on their behalf by their agent or agents appointed under the durable Power of Attorney.

Use In Simpler Transactions

A durable Power of Attorney might be used in simpler transactions.

For example, a Power of Attorney might authorize:-

someone to sign a contract to purchase a vehicle on behalf of the principal on a certain date, because the principal will be out of town
someone to source specific records from certain third parties on behalf of the principal, such as an accountant seeking copies of tax records
a corporation, company or partnership to collect on behalf of the principal a debt owed to the principal
a person, corporation, company or partnership to monitor the performance of agents under a separate Power of Attorney

Use In Sophisticated Transactions

In a sophisticated transaction:-

(first party) a person may create a durable Power of Attorney to ensure that someone is authorized to complete the transaction on their behalf, if they lose capacity
(other party) the other party might insist that the person they are dealing with sign a suitable durable Power of Attorney, authorizing an agent to complete the transaction on behalf of that person, if the person the other party they are dealing with loses capacity

In particular, in a sophisticated transaction, a durable Powers of Attorney tend to minimise the risk of liability for damages if a person loses capacity.

Use In A Risk Management Context

Each year in the United States:

20 million people are injured on the road, at work, or engaging in recreational activities
1.2 million people attend emergency as the victim of an assault
6.4 million people attend emergency having been attacked by an animal
1 million people are diagnosed with a brain related disease or disorder
250,000 people attend emergency having been poisoned
36 million people fall
48% of traumatic brain injuries are caused by falls
21% of traumatic brain injuries are caused by motor accidents and assaults

Around 60 million people suffering a debilitating injury each year.

3.5 million debilitating injuries involve traumatic brain damage.

Right now, 25 million people are living with a brain related injury, Alzheimer’s disease or mental illness.

1 in 14 people are struggling to take care of themselves.

The risk that you find yourself in need of a Power of Attorney increases with age.

A principal might use a durable Power of Attorney to authorize someone to control their commercial affairs, in the event that the principal loses capacity.

Traumatic events that might give rise to cognitive and physical incapacity include:-

early onset disease or illness including causes of strokes, heart attacks, paraplegia etc.
work, motor vehicle, household, recreational or other accidents, accepting that:-
- there are many dangerous occupations, such as logging, energy sector roles, aircraft, delivery work, law enforcement, emergency and correctional services
- 53% of all injuries occur in the home
- many recreational activities are dangerous (i.e. racing, combat sports, hang-gliding, rock climbing, sky-diving, boating, rock fishing, rodeo riding etc.)
exposure to toxins, poison or chemicals, electrocution or oxygen deprivation
criminal or animal inflicted injury
effects of the ageing process, including degenerative conditions like Altzheimer's, Parkinson's, cerebral palsy etc.

There are good reasons for everyone to consider using a durable Power of Attorney.

With a durable Power of Attorney in place, family are not left without option but to approach a Court for orders permitting them to manage the affairs of a family member who lacks capacity.

For families, incapacity of a loved one is enough to deal with, without having to file and manage legal proceedings to access critical funds, manage family property, perhaps manage claims or entitlements available to their incapacitated relative and similar.

For singles, the consequences of a tragic accident are also troubling, commonly justifying the appointment of professionals, to ensure that their interests are protected if they lose capacity.

Historical Developments Account For The Need For Durable Powers of Attorney

For some years, Courts have been presented with cases involving:-

persons who require someone to ‘manage’ their affairs because they have lost capacity, with or without a Power of Attorney
Powers of Attorney containing an expression that the Power of Attorney is to survive the incapacity of the principal

Nonetheless, when we speak of durable Powers of Attorney, we are talking about a relatively new, legislative invention.

The 2010 article Power of Attorney: Convenient Contract or Dangerous Document by Catherine Seal contains a useful, brief account of initiatives which substantially commenced in 1964 to achieve national uniformity in the context of use of durable Powers of Attorney.

In short, the history shows:-

under the common law, a Power of Attorney often terminated upon the principal losing capacity
over time since around 1964, governments (i.e. state legislatures) have introduced legislation permitting the creation of durable Powers of Attorney that do not succumb to such common law principles

The 1994 California Law Revision Commission Report which led to enactment of Division 4.5 of the Probate Code, stated:

"The statutes governing powers of attorney are in need of reorganization and revision. Since 1979, several bills have been enacted recognizing general durable powers of attorney and durable powers of attorney for health care, providing statutory forms, specifying a procedure for enforcement of the duties of attorneys-in-fact, and making a number of other changes in the law.."

.".the piecemeal nature of the revisions over the past 12 years has resulted in a disorganized set of statutes.. unclear.. obscure and incomplete.. [providing] little practical guidance.."

"The proposed Power of Attorney Law restructures the Power of Attorney statutes and relocates them as a new Division 4.5 of the Probate Code, starting with Section 4000.."

"Durable Powers of Attorney are an increasingly important tool in ordering private affairs, resulting in special legislative attention in several other jurisdictions, as in California.."

"Relocating the Power of Attorney statutes in the Probate Code reinforces the estate planning nature of the durable Power of Attorney, and assists in distinguishing Power of Attorney for personal reasons from Powers of Attorney used in business transactions.."

Durable Powers of Attorney Are Sophisticated Legal Instruments

A durable Power of Attorney is intended to operate at a time when the principal lacks or may lack capacity.

Durable Powers of Attorney are expected to meet difficult challenges and raise sophisticated considerations.

Durable Powers of Attorney involve the balancing of delicate rights and interests as between the principal, agent and any third party, some of which may be hard to decipher.¹

There Are Challenges Dealing With Lack of Capacity

Unique challenges associated with durable Powers of Attorney include:-

protection of the interests of a vulnerable person, who is without capacity to evaluate, express or take steps to protect their own interests
a persisting question as to what is in the best interests of a vulnerable person without capacity
the risk that an unscrupulous person takes advantage of a vulnerable person without capacity is taken advantage of by the unscrupulous
the fluid nature of capacity, often changing and involving partial capacity
the difficult nature of determining capacity at any given time
the potential long term management of the needs of a vulnerable person without capacity to care for themselves

Considerations To Be Balanced

A durable Power of Attorney strives to balance various considerations, including:-

freedom of any principal to structure their affairs under a Power of Attorney however they see fit
a common lack of expertise on the part of many agents, often family members without legal or accounting qualifications
the cost associated with audit and other risk management processes in a Power of Attorney
the cost and effectiveness of government supervision (including related judicial costs)
the need for confidence as to the bona fides of a Power of Attorney on the part of third parties dealing with an agent

Troubling Nature of Potential Problems

Problems arising from the abuse of a durable Power of Attorney tend to be profound.

It is a cruel twist that an unscrupulous agent who dissipates assets of a vulnerable principal without capacity effectively robs them of the means they might use to ‘right the agent’s wrong' and worse, robs them of the vulnerable principal when they have no capacity to source further resources.

A vulnerable principal might find themselves without means and without ability to source new means, without anyone in their life willing to pursue a claim available to them against the unscrupulous.

It falls to the principal to minimize risks by including checks and balances in their Power of Attorney.

Compounding Nature Of The Problem

The very nature of a Power of Attorney may frustrate and compound problems when an unscrupulous agent dissipates assets of a vulnerable principal without capacity.

In particular, the duty of confidentiality owed by an agent can play havoc with the efforts of someone trying to resolve whether or not a Power of Attorney has been used improperly.

An agent in a durable setting may assert that the duty of confidentiality they owe to the principal prevents them answering questions, releasing information or providing records to a third party, such as a concerned family member.

Unless a Power of Attorney manages this issue well and is accessible to others, risks tend to increase.

Significance of Family Relations

In the context of concerns about the conduct of an agent in a durable setting, family members deserve special consideration.

When the actions of an uncle or brother, niece or child are at stake, no one may be keen to allege impropriety, because it may fracture family relations.

Many family members who become aware of a possibly unscrupulous agent are inherently more likely to say nothing if they feel that to say anything might result in family friction. Moreover, most people are reluctant about going to Court and may not go to Court for themselves, let alone for someone else.

In particular, a family member who has no actual evidence that clearly warrants them going to Court, may be less enthusiastic.

Relying on inexperienced family members, perhaps a brother, uncle or parent to go to Court for the purpose of conducting a set of proceedings for purposes of no immediate benefit to themselves, to raise a case involving a family member being alleged to have engaged in unscrupulous conduct in respect of which outcomes may be uncertain, is often more than might be expected from even the most loving family members.

If a family member find themselves denied access to records by an agent, they might be forgiven for not taking things further.

Even where suspicious or troubling conduct involved, it may yet remain difficult to form a conclusive view that any legal proceedings will be successful, resulting in inaction.

Addressing The Problem

As to preventing the abuse of a Power of Attorney:-

only ‘daily audits’ would mean any unscrupulous conduct was identified without delay
nonetheless, even an audit system that involves infrequent review is more likely to reduce the risk unscrupulous conduct than no audit system

Government forms deserve special mention in this context:-

checks and balances do not form part of most government forms
checks and balances should be considered for inclusion in a government form

Users of a government form might benefit from reading the information under the heading Using A Government Form In Conjunction With A Custom Power Of Attorney.

Suitable Terms

Terms in a Power of Attorney might deal with:-

the agent's duty of confidentiality being secondary to obligations to answer questions, provide information and records etc.
the agent's compulsion to provide information

Both aspects of the design of a Power of Attorney referred to above are important, the first to ensure the agent cannot 'claim confidentiality' and the second to ensure the agent assists.

Suitable arrangements with respect to access to a Power of Attorney typically involve:-

a copy of the Power of Attorney not merely being accessible to the agent:-
the Power of Attorney being accessible to someone who will act to protect the principal's interests (as to the expectation they will act, it may be appropriate to impose this obligation in writing)
ensuring other persons have a copy of the Power of Attorney, or at least ready access

For any principal there is likely to be a balancing exercise involved when deciding how these sorts of arrangements are to work, in particular balancing the importance of access to documents and information and for example, the concern of the principal to keep their affairs private and confidential.

Regular Audit Arrangements

Recognizing the risks associated with family members in a durable setting, it may make good sense to include regular, non-optional audit arrangements.

Anything less may itself be a source of friction between family members.

Regular, non-optional audit arrangements mean:-

there is no awkward need for a family member to for example, engage some ‘optional’ audit procedure
there is no risk that the engagement of that audit procedure itself produces friction, for example, debate about how frequently reviews should be undertaken and similar

Regular Audit Arrangements Tend To Prevent Unnecessary Legal Proceedings

Equally consistent with this approach are the interests of the principal in ensuring that their affairs do not unnecessarily end up before a Court, one effect of regular auditing being to reduce the likelihood that anyone 'gets the wrong idea' and rushes into Court unnecessarily, resulting in the principal's affairs being unnecessarily put before a Court, resulting in unpredictable outcomes.

A Special Word About New York

In the context of risk management, New York does things differently.

In New York, a monitor appointed under §5-1509 has a right to inspect “a record of all receipts, disbursements, and transactions.”

Whilst it might be suggested that the role of a monitor be developed further (as discussed further under the heading The Role Of A Monitor May Be Expanded, perhaps subject to expanding the role of a monitor), there are good reasons to appoint a monitor in New York, as a means to minimise problems.

New York is the only one of the Six (6) Greater States to include in their legislation an officeholder with audit functions.

The Global Experience Is Wide And Varied

Durable Powers of Attorney are now operating in most American states and other western countries.

The world paints an interesting picture in its efforts to manage issues associated with durable Powers of Attorney.

At one extreme, we have Louisiana and South Africa, where governments are yet to pass legislation authorizing the creation of durable Powers of Attorney.

At another extreme, we have the United Kingdom and the Northern Territory of Australia where the equivalent document to a Durable Power of Attorney in America must be created using a government form:-

in the United Kingdom, under the Mental Capacity Act, 2005 (UK):-
- a Lasting Power of Attorney confers no authority unless it complies with Schedule 1: §9(3)
- Schedule 1 provides that an instrument is not made in accordance with Schedule 1 unless it is in the prescribed form: Schedule 1, §1(a)
in the Northern Territory of Australia, under the Advance Personal Planning Act, 2013, an Advance Personal Plan must be made in the approved form: §9

Then we have Illinois, where legislation goes as far as to permit a principal to "specify in the agency the event or time when the agency will begin and terminate, the mode of revocation or amendment and the rights, powers, duties, limitations, immunities and other terms applicable to the agent and to all persons dealing with the agent, and the provisions of the agency will control notwithstanding [the legislation]..." , the notion of a Power of Attorney being capable of defining rights, powers, duties, limitations and immunities applicable to a third party being novel in comparison for example, to the other five (5) of the Six (6) Greater States.

In further contrast, there are states with very scant legislation, for example Arizona (see Chapter 5 Article 5) and the District of Columbia (see Title 21, Chapter 21).

These experiences demonstrate a very wide variety of approaches across the globe.

The ULC Approach

In Recommendations made by the Uniform Laws Commission (ULC) in 2006, the ULC promotes an approach whereby all Powers of Attorney are recognized as durable, unless the Power of Attorney expressly provides that it terminates upon the principal losing capacity.

In the 2006 ULC Recommendations:-

§102 contains definitions and says that in respect of the term “durable” with respect to a Power of Attorney, this term means "not terminated by the principal’s incapacity”
§105 states “..a Power of Attorney created under this [act] is durable unless it expressly provides that it is terminated by the incapacity of the principal..”

The ULC approach has been adopted somewhat wholeheartedly in New York.

By contrast, California, Texas and Florida continue to follow the more traditional approach, requiring the inclusion of an expression of durable preference in a durable Power of Attorney.

Illinois and Pennsylvania have preferred an approach closer to the ULC approach, in particular obviating any need for inclusion of an expression of durable preference in a durable Power of Attorney.

The ULC approach:-

tends to remove any need to specify that a Power of Attorney is durable
shifts the focus when drafting a Power of Attorney away from inclusion of an expression of durable intent
requires a principal to expressly provide that they want their Power of Attorney to succumb to any common law consequence if the principal loses capacity, if the principal prefers that outcome
tends to remove any issue as to capacity by:-
- making unnecessary determination of whether the principal lacks capacity. as part of any determining its validity
- capacity is only relevant if the principal takes positive steps to make it an an issue

Capacity At Execution

The ULC approach does not remove capacity at the time of creating the Power of Attorney as a live issue.

A prudent principal might want to maintain suitable medical evidence affirming their capacity at the time they executed the Power of Attorney.

Freedom of Choice Is Important

Unrestricted power to delegate our affairs in any terms we see fit is an important human right.

For example:-

before asking are sub-agents permitted we should ask why shouldn't they be permitted?
before asking can a protector be appointed in a state where this is not expressly authorized by legislation we should ask, why not?

In the context of goverments defining what options are available when creating a Power of Attorney, any public interest in ‘avoiding complexity' must be balanced against the importance of ensuring that we are freed to structure our affairs however we see fit.

It is hard to imagine anyone else being as well placed as ourselves to know what is best, in terms of protecting our interests if we lose capacity, that is, in terms of deciding who should assist, what conditions should control their appointment, whether they should perform some tasks by agreement with someone else, what directions and limitations should be apply and similar.

Rather than for example, prescribing that sub-agents cannot be appointed, governments might look to impose various 'by default, safety net terms', that is, rules that apply if the principal does not express a preference, for example rules dealing with the right of agents to appoint sub-agents which only apply if the Power of Attorney is silent about this issue.

A Special Word About Illinois

Within the Six (6) Greater States, Illinois is the only state to use language of the following kind in its legislation, being language that really emphasizes freedom on the part of a principal to construct a Power of Attorney however they see fit.

§2-4 in Illinois states:-

“..[t]he General Assembly recognizes that each individual has the right to appoint an agent to make property [and] financial.. decisions for the individual..

..[t]he principal may specify in the agency the event or time when the agency will begin and terminate, the mode of revocation or amendment and the rights, powers, duties, limitations, immunities and other terms applicable to the agent and to all persons dealing with the agent, and the provisions of the agency will control notwithstanding this Act.." (§2-4)

This follows on from §2-1, which provides:-

“The General Assembly recognizes that each individual has the right to appoint an agent to make property, financial, personal, and health care decisions for the individual but that this right cannot be fully effective unless the principal may empower the agent to act throughout the principal's lifetime, including during periods of disability, and have confidence that third parties will honor the agent's authority at all times..”

None of the five other of the Six (6) Greater States have words like these words (above) in Illinois in their legislation.

Creature of Statute

A document which only exists because it is prescribed by legislation, is often called a ‘creature of statute'.

A durable Power of Attorney is such a document.

The user of a durable Power of Attorney:-

may assume that parts of the common law pertaining to non-durable Power of Attorney also apply to durable Powers of Attorney
cannot assume that common law pertaining to non-durable Power of Attorney not repeated in the legislation applies to a durable Powers of Attorney
must interpret the legislation which is new and changing

Beyond the legislation, other matters are typically uncertain, because:-

the law in relation to Powers of Attorney and capacity is developing
dealing with capacity tends to involve issues not arising in other circumstances

Do We Really Need Durable And Non-Durable Powers of Attorney?

With respect to the possibility of a future without the distinction between durable and non-durable Powers of Attorney:-

if the approach taken in the 2006 ULC Recommendations were adopted nationally, all Powers of Attorney would be presumed to be durable unless they state otherwise (see §102):-
in practical terms this would mean for example, that a Power of Attorney not stated to be either durable or non-durable, would be durable, unless the Power of Attorney expressly provided that it terminated upon the incapacity of the principal
perhaps the objective at stake would be better served if §102 read ““Durable,” with respect to a Power of Attorney, means not terminated, suspended, deemed voidable or otherwise qualified in its operation by any common law principle, as a consequence of the principal’s incapacity”, the significance of which is explained in Part 2: Technical Aspects below
if we were to recouch the language applicable to Powers of Attorney so as to recognize a Power of Attorney as simply what is today known as a durable Power of Attorney, we would have removed the need to speak of durable and non-durable Powers of Attorney, other than perhaps in circumstances where a person prefers that their Power of Attorney succumb to any consequence at common law, if the principal loses capacity
from there, we would be remarkably close to removing the distinction altogether, particularly if it were concluded in favour of a durable Power of Attorney being able to be cast that terminated if the principal preferred, or perhaps was suspended if the principal prefers etc.
under the heading Can A Durable Power Of Attorney Terminate At The Moment The Principal Lacks Capacity? the question of whether a durable Power of Attorney can be created that terminates upon the principal losing capacity is examined
if the answer to that question is yes, it seems there is a real possibility that in the future, we could remove the distinction between durable or non-durable completely in the future, in favour of a better appreciation of durable Power of Attorney being a creature of intention, nothing else and accordingly, capable of being cast in any terms, as long as the intention is to cast the Power of Attorney as durable, evidenced by compliance with any mandatory requirements and in particular, intended to be governed by the legislative regime

In New York or Florida, the need for distinction is less than in other states, because legislation typically applies equally, irrelevant to whether a Power of Attorney is durable or non-durable.

For example, the third party enforcement regimes in New York and Florida are accessible whether or not a durable or non-durable Power of Attorney is used, whereas in Texas for example, the third party enforcement regime is only accessible in respect of a durable Power of Attorney

Typically, the distinction tends to affect:-

the question of what relief is available, for example if something goes wrong
the content of the mandatory requirements, which may vary depending upon whether a Power of Attorney is durable or non-durable

Uniform Mandatory Requirements

Anyone focused on removing the distinction between durable and non-durable Powers of Attorney would probably embrace uniform mandatory requirements, dealing with issues like required wording, font size, inclusion and content of relevant notices and similar.

Establishing uniform mandatory requirements is likely to remain particularly difficult for as long as some states (i.e. California, Texas and Florida) require inclusion of an expression of a durable preference in a durable and other states (i.e. New York, Illinois and Pennsylvania) impose no such requirement.

It may be that a future is possible where:-

a universal approach is taken to durable or non-durable Powers of Attorney in terms of their physical construction and content
a raft of measures apply that deal with issues associated with loss of capacity, unless the principal expresses an overriding preference, following on from the ULC 2006 Recommendations

If A Definition of "Durable" Is Needed

If the term “durable” is needed, it seems preferable to adopt an approach to its meaning that:-

avoids reference to termination
focuses upon the intention of the principal
is cognizant of the possibility that at common law, there may not be only one outcome where a principal loses capacity
is cognizant of an intention on the part of the principal that:-
- the continuing operation of the Power of Attorney not be affected by any common law pertaining to incapacity and
- the Power of Attorney operate precisely in accordance with its terms

This approach importantly tends to remove confusion associated with reference to the notion of termination, accepting that:-

approaches that define a Powers of Attorney in terms referring to termination, such as “a Power of Attorney that does not terminate upon the principal loses capacity” or “a Power of Attorney that terminates upon the principal loses capacity” tend to unnecessarily complicate matters, for example where the Power of Attorney prescribes it terminates on a certain day
by removing reference to termination and focusing upon the intention of the principal with respect to avoidance of any common law principle at all that might qualify the operation of the Power of Attorney as a consequence of the principal losing capacity, focus is constrained to the real issue at stake, termination being no more than incidental to the real issue, one of various possible outcomes at common law where the principal losing capacity

In Texas, Casting A Power of Attorney As Durable Has Special Advantages

It may be of particular advantage to a person in Texas to cast a Power of Attorney as a durable Power of Attorney.

That is not to say that use of durable Power of Attorney in California, New York, Florida, Illinois and Pennsylvania is not advantageous. It is only that in Texas, more relief and remedies are available where a durable Power of Attorney is used.

For example in Texas, casting a Power of Attorney as a durable Power of Attorney entitles the principal and their agents to rely on third party enforcement regime.

California, New York, Florida and Pennsylvania also have a third party enforcement regime, however in these four (4) states the third party enforcement regime is accessible whether or not a Power of Attorney is durable.

As to why Illinois does not have a third party enforcement regime one possible explanation is cited under the heading A Special Word About Illinois.

Perhaps the reason that Texas takes the approach it has because it recognizes any Power of Attorney may be cast as a durable Power of Attorney and for reasons of the kind discussed under the heading Do We Really Need Durable And Non-Durable Powers of Attorney, a view is preferred that in fact, any Power of Attorney may be cast as a durable Power of Attorney.

Complexities

Transient Nature of Incapacity

One of the more difficult aspects associated with the notion of capacity in the context of use of Powers of Attorney is the reality that capacity can and often is, changing.

It is all too easy to wildly assuming in any discussion of durable and non-durable Powers of Attorney that at all times, we are easily certain whether or not a principal either has capacity or lacks capacity.

In reality, capacity is often partial and changing over time.

There are probably a good proportion of cases each year in every state where the capacity of a principal is borderline, for example a patient measuring close to 10 on the dementia scale, half way from a full score of 20 and yet demonstrating cognitive ability, albeit their capacity may be deteriorating.

Beyond the issue of changing capacity, it might be fair to ask why there is a preponderance to focus upon the broader question of whether a principal lacks capacity, as opposed to perhaps the more pertinent question of whether the principal lacks capacity to perform the specific tasks authorized to be performed under the Power of Attorney.

It seems fair to say:-

whether the principal lacks capacity to perform the tasks authorized to be performed under the Power of Attorney seems more relevant than whether the principal lacks capacity in any other respect
focus upon capacity to perform the tasks authorized to be performed under the Power of Attorney tends to make the task of any medical practitioner asked to comment as to capacity decidedly more palatable

It may be interesting to recognize that in California, the concept of incapacity is defined in more detail and for example, §811 includes (bold added):-

“In determining whether a person suffers from a deficit in mental function so substantial that the person lacks the capacity to do a certain act, the court may take into consideration the frequency, severity, and duration of periods of impairment..”

None of the other Six (6) Greater States have a similar provision in their legislation.

The difficulties associated with this issue represent the strongest argument in favour of durable Powers of Attorney that authorize an agent to perform tasks whether or not the principal has capacity, being a design that:-

reduces the relevance of the capacity of the principal from any dispute
virtually affords an agent free reign to use the Power of Attorney at any time, subject to its terms

When crafting a Power of Attorney, it is worth considering that, for example:-

a provision to the effect that an agent may only perform a task if the principal lacks capacity, (or even a provision that an agent may only perform a task if the principal has capacity) results in a greater prospect that a dispute may be raised in the future as to the scope of an agent's authority at some prior point in time
capacity (or incapacity) can be difficult to prove, particularly given evidence tends to dissipate over time.

Failure to Comply With Mandatory Requirements

Mandatory requirements vary from state to state:-


New York, Illinois & Pennsylvania	A Power of Attorney for a person ^[3] is durable unless it provides otherwise. Durable and non-durable Powers of Attorney are subject to the same requirements with respect to execution, inclusion of mandatory notices etc. (i.e.the same for both durable and non-durable Powers of Attorney in each of these states, these requirements differing between the three (3) states).
California	A person ^[4] who is creating a durable or non-durable Power of Attorney largely must comply with the same mandatory requirements with respect to execution, although a person ^[5] creating a durable Power of Attorney must also include a mandatory notice (§4128) and expression of durable preference, which are not requirements applicable to a non-durable Power of Attorney.
Texas	There are no requirements imposed by legislation in respect of a non-durable Powers of Attorney. A person ^[6] creating a durable Power of Attorney must comply with certain mandatory requirements, including the inclusion of an expression of durable preference.
Florida	A person ^[7] creating a Power of Attorney must comply with the certain mandatory requirements, including the inclusion of an expression of durable preference in a durable Power of Attorney.

Vexed issues can arise where a Power of Attorney for a person² fails to comply with mandatory requirements.

Failure to execute a Power of Attorney for a person³ before suitable witnesses or include required words may put a Power of Attorney in an impossible position.

It may be untenable to give effect to its contents, because it does not satisfy mandatory requirements that are referable to a durable or non-durable Power of Attorney, whichever be applicable.

For example, where it is clear from the terms of a Power of Attorney provide for an agent to perform certain tasks only if the principal lacks capacity, if the Power of Attorney does not satisfy the mandatory requirements applicable to a durable Power of Attorney, a Court may be in difficulty accepting that the Power of Attorney has any effect.

Outcomes in these kinds of cases may vary. Courts typically have wide discretion to grant relief.

The risk that a Power of Attorney for a person ^[26] is deemed void ab initio for failing to comply with mandatory requirements or given an effect by a Court that was not intended by the principal highlights the importance of ensuring that due consideration is given firstly to whether a Power of Attorney is durable or non-durable and secondly, whether the appropriate mandatory requirements complied with.

Fallacies & Shortcomings Repaired

Fallacy: Focus Rests Upon The Authority of Agents

It is surprising how many people would erroneously account for a durable Powers of Attorney as ‘a Power of Attorney that appoints an agent to act if the principal lacks capacity’.

In fact, what determines whether a durable Power of Attorney is durable is irrelevant to when an agent is authorized to do anything.

What matters is what the principal intends if the principal loses capacity, in terms of whether the arrangements in the Power of Attorney are to continue to be effective.

Fallacy: Durable Arrangements Work Similarly In All States

It may not always be acknowledged that things work differently in the Six (6) Greater States:-

in New York, Illinois and Pennsylvania, all Powers of Attorney are deemed to be as durable, so as to not require a principal to include an expression of durable intent
in California, Texas and Florida, a principal wanting to create a durable Power of Attorney is require to include an expression of durable intent in their Power of Attorney

This fundamental divide between these two groups of states is a good example of their differences, accepting there are many differences.

Fallacy: A Durable Power of Attorney Must Always Be Used To Authorize An Agent To Perform Tasks When The Principal Lacks Capacity

If a principal only authorizes agents to do things at a time or different times in the future when the principal has capacity, this does not mean:-

the Power of Attorney must be non-durable
the Power of Attorney must be durable

Any determination of whether the Power of Attorney is non-durable or durable turns upon what the principal intends if the principal loses capacity, in terms of whether the arrangements in the Power of Attorney are to continue to be effective:-

if the arrangements are to continue, the Power of Attorney must be durable
if the arrangements are not to continue, the Power of Attorney must be non-durable

Of course, if an agent was only authorized to perform tasks when the principal lacks capacity, the position would be different.

Determining in this manner whether a Power of Attorney is non-durable or durable does not involve any need for determination of capacity, the sole focus of inquiry being the intention of the principal.

Any need to determine capacity of the principal could only be a secondary issue, such that the question of capacity might be:-

avoided by authorizing agents to perform relevant tasks whether or not the principal lacks capacity
‘thrown into the spotlight’ so to speak, where for example a durable Power of Attorney provides that in the event that the principal lacks capacity, agents may perform tasks they might otherwise not perform, must comply with certain directions, or must satisfy certain conditions

The Case Study titled The Mentally Ill illustrates use of a durable Power of Attorney only authorizing agents to perform tasks when the principal has capacity.

Shortcomings With Alternative Descriptions of “Durable”

Lesser descriptions of “durable” than those cited above are not helpful. For example, consider the following alternatives.

Lesser Alternative 1: "..a durable Power of Attorney is a Power of Attorney authorizing agents to perform tasks if the principal lack capacity”

This description:-

omit reference to the intention of the principal
merely infer a preference on the part of the principal that the Power of Attorney is intended to continue to operate beyond any point in time when the principal loses capacity
is merely an account of one possible design of a durable Power of Attorney
tends to confuse the issues, by failing to recognize the central tenet as intention and focusing upon tasks that an agent may perform

Lesser Alternative 2: "..a durable Power of Attorney is a Power of Attorney authorizing agents to perform tasks after any future point in time that the principal lacks or may lack capacity”

This description:-

fails to focus attention upon the single, first point in time when the principal loses capacity
tends to confuse the issues, by failing to recognize the central tenet as intention and focusing upon tasks that an agent may perform
appears to describe only a Power of Attorney that ‘authorizes agents to perform tasks after a certain date, after which the principal’s capacity is of no consequence', being no more than one of literally millions of different possible designs of durable Power of Attorney, this description arguably failing to recognize for example, a durable Power of Attorney of the kind seen in the Case Study - Mental Illness.

Solving The Fundamental Problem

The fundamental problem associated with durable Powers of Attorney is a resource problem.

You would readily believe someone who said to you, “I am not particularly willing to go out on a limb and perform many hours of work including spending many hours with lawyers, taking risks in relation to costs unless it is for myself” and “you can never be sure that if you lost capacity and someone steals your money, someone else would do everything necessary to recover the monies”.

A vulnerable principal is seriously at risk of losing everything, with poor prospects of recovery, because unlike any other person, a vulnerable principal may not be able to act for themselves, perhaps not even be aware anything is wrong.

It is often said this is a complex problem, however it is solvable.

An injection of resources to ensure a vulnerable principal is not abused is required and in principle, this seems achievable. Whether or not we choose to adopt such an approach is an entirely different question.

Below under the heading A New Kind Of Insurance Scheme is one idea that might work to solve the fundamental problem.

This idea simply demonstrates that in principle, there may yet be strong solutions and we should look for the best solution.

We must not become complacent and accept risks as some sort of ‘cost of using a durable Power of Attorney’.

There must be a way to make durable Power of Attorney work better.

A New Kind Of Insurance Scheme

Consider this approach:-

a life insurer that receives premium to cover of the cost of regularly vetting the insured's affairs, if they lose capacity or are at risk of having lost capacity, where an agent has commenced to exercise authority under the Power of Attorney
the life insurer receives a Power of Attorney from the insured, being a Power of Attorney authorizing the insurer to audit the principal's Power of Attorney affairs, if the principal loses capacity or is at risk of having lost capacity, where an agent has commenced to exercise authority under the Power of Attorney
the Power of Attorney (or relevant ‘policy’) entitles the insurer to prosecute claims against unscrupulous agents or third parties, where there there are prospects for recovery and for example, recognizing they may resign if the principal interferes with their rights to review the principal's affairs and where the insurer forms the view the principal may have lost capacity
the insurer is entitled to use the principal's funds to take recovery action (perhaps nonetheless sharing in costs risks) and also, is entitled to a share of any proceeds, particularly to cover any costs met by the insured (if this also be part of the arrangement, for example where a principal has been left without means)

Consideration would need to be given to many issues, such as ensuring that the insurer honours the policy and the importance of obtaining supportive legal opinion as to prospects for success and recovery, before pursuing any claim.

It is not necessary to dive further into the minutiae of this sort of arrangement.

Revision of Government Forms

Consider the impact upon the number of incidents involving abuse of Powers of Attorney if government forms included provision to the following effect:-

every one, two or perhaps three years (1-3 years), the agent(s) must present the books and records relating to the principal’s affairs to an accountant for review; and
a certain trusted person or trusted persons, other than any agent appointed under the Power of Attorney, is authorized to inspect all records relating to the principal at any time upon reasonable notice and for example, also attend upon the accountant, review related books and records as they see fit and similar

In fairness, New York (§1509) has included something akin to these arrangements in its legislation by at least defining the role of a monitor and including space in the government form to identify them.

None of the remaining five (5) of the Six (6) Greater States have preferred to address this issue in legislation.

Even in New York where a monitor can be appointed, it is fair to say that there are a raft of other measures that might form part of risk management modelling in respect of a durable Powers of Attorney.

Equally, a principal might consider the advantages of the kind of arrangement discussed in this Wiki under the heading Appointing Family Members As Managers, involving family members having roles as agents with authority limited to each appoint a sub-agent, being a professional.

It seems the greatest perceived drawback with arrangements involving regular review is cost.

It may be that part of the future solution is the development of purpose built accounting packages, like Xero, specially designed to deal with an agents accounts, allowing agents to use accounting practices, processes and services that significantly reduce the cost of external accounting review, because records are created in perfect order.

Surely the answer is to leave cost considerations to the principal and make audit arrangements ‘conveniently optional' by at least having a ‘box to tick’ on the government form, accepting that only New York has included some measure in their government form (see monitors).

Further commentary is found under the heading Improving Government Forms.

Part 2: Technical Aspects

What Is A Durable Power of Attorney?

In this Wiki, the following approach to durable Powers of Attorney is preferred.

At Common Law

At common law, the agency relationship and the agent's authority to act are terminated on the death, bankruptcy or incapacity of the principal.⁴

Consequently, to create a Power of Attorney that does not terminate on the incapacity of the principal, legislation is required.

Where

All of the Six (6) Greater States have passed legislation recognizing the right of a person to create a durable Power of Attorney.

Requirements

A durable Power of Attorney must not be for a purpose that is excluded from the ambit of the legislation.

A durable Power of Attorney must comply with certain mandatory requirements.

Exclusions and Mandatory Requirements

Relevant exclusions and mandatory requirements are imposed under the legislation of each of the Six (6) Greater States.

The exclusions and mandatory requirements in any of the Six (6) Greater States may be the same as or different to the exclusions and mandatory requirements in any of the other Six (6) Greater States.

Legislation

In 1954, Virginia, was the first state to allow a Power of Attorney to continue beyond the principal's incapacity.⁵

Estate Planning Purposes

The durable Power of Attorney is most commonly used to handle the affairs of an incapacitated person without court supervision.

Business Purposes

Any person undertaking a substantial transaction of any kind, in particular a transaction that might result in a claim for damages in the event the person does not fulfil their side of the contract (i.e. a contract to buy a house, purchase a business etc. sell certain property etc.) or who engages in these kind of transactions from time to time, would be well placed to create a durable Power of Attorney.

If you are entering such a transaction with a person, you my prefer that the person you are doing business with properly executes a durable Power of Attorney authorizing an agent to complete the transaction on their behalf, if they lose capacity.

Examples of Designs

A durable Power of Attorney might authorize an agent to act after a certain future date, if the principal lacks capacity, or upon as the happening of an event, such as a birth or adoption of a first child, marriage or someone's death and thereafter operate if the principal lacks capacity.

A durable Power of Attorney might authorize an agent to act between two dates in the future:-

if the principal lacks capacity between those two dates, without authorizing the agent to act before the earliest of those two dates even if the principal lacks capacity
whether or not the principal lacks capacity between those two dates and authorize the agent to act before the earliest of those two dates, if the principal lacks capacity earlier in time

A durable Power of Attorney might for example, authorize an agent to act before a certain date whether or not the principal lacks capacity and only after that date if the principal has capacity, or perhaps only if after that date if the principal lacks capacity etc.

Even a durable Power of Attorney that authorize an agent to act if the principal lacks capacity raises design considerations, such as considerations for the purpose of determining capacity, which might be a matter, for example:-

determinable by an agent
requiring a doctor to furnish a report confirming that the principal lacks capacity
be assigned for determination by multiple agents jointly, or by majority
certified by an agent

There are lots of possible designs, although perhaps using the simplest design is best employed by anyone wanting to keep their affairs as simple as possible, for example ensuring that where a Power of Attorney operates between two future dates, during the period between the two dates, the agent may act whether or not the principal lacks capacity.

More sophisticated designs of durable Powers of Attorney for example, might authorize an agent or different agents to perform different tasks, or certain tasks differently, depending upon whether the principal has or lacks capacity.

Simplest Design

The simplest design is a durable Power of Attorney that authorize an agent to act whether or not the principal lacks capacity, from the moment that the principal properly executes the Power of Attorney.

This simple design substantially removes the need to consider whether or not the principal lacks capacity (other than at the time that the Power of Attorney is properly executed by the principal, reducing the possible need to consider medical evidence in the context of a dispute about the Power of Attorney and for example, ensuring an agent is always confident that they have authority, without regard to the principal's capacity.

Nuances In The Six (6) Greater States

Things work differently in the Six (6) Greater States.

Florida

Florida has prohibited Powers of Attorney that “become effective” in the future (see §2201(1).

This is interesting because:-

Florida does not have a government form which might shed light on the implications of this limitation
Florida does not appear to prohibit the use of a Power of Attorney that is immediately binding upon the principal and authorizes an agent or different agents to perform certain tasks until some future point in time
a Power of Attorney designed to authorise the performance of particular tasks at some future point in time in Florida might usefully include some innocuous task in such a Power of Attorney that may be performed forthwith upon the Power of Attorney being properly executed by the principal, making clear that for example, that all other tasks authorized to be performed by an agent or different agents under the Power of Attorney may only be performed at a later, nominated point in time, to minimise the risk that a poor approach is taken by someone to §2201(1), which might otherwise compromise the operation of such a Power of Attorney.

California
Texas
New York
Illinois
Pennsylvania

Determining When A Power of Attorney Is Intended to Be Effective

Accepting that the description above is in two parts, depending upon whether the Power of Attorney is intended to be effective immediately, it is purposeful to consider that unless a different intention is recorded in a Power of Attorney, a Power of Attorney is presumed to be intended by the principal to be effective upon being properly executed by the principal.

An expression of a different intention might involve words being included in a Power of Attorney along the lines of:-

"This Power of Attorney will be binding upon me, the principal, on and after .[insert date or event]..."

Another variation might be:

"This Power of Attorney will commence to be effective upon..[insert date or event].."

Unless words of this kind are found in a Power of Attorney (or perhaps evidence of some contrary intention is found elsewhere) it is likely to be assumed that a Power of Attorney is intended to be binding upon the principal (i.e. effective) immediately upon being properly executed by the principal.

Remedial Nature of Legislation

The expression "at common law" is used to refer to the position at law, if any relevant legislation is ignored.

It is a useful expression, because legislation often operates to modify the common law and so, if we wish to make clear we are talking about the law "as it was" prior to introduction of any relevant legislation, the expression "at common law" makes this clear.

Where legislation is introduced that modifies the common law, it seems reasonable to describe such legislation as remedial, accepting views may differ.

The notion of remedial legislation is discussed in articles like Remedial Legislation by Rudolph H. Heimanson (1968); Statutory Interpretation: General Principles and Recent Trends by Larry M. Eig (2014), Interpretation of Statutes in Derogation of the Common Law by Jefferson B. Fordham and Russell J. Leach (1950)

In those articles, there is reference to "the equally familiar rule that statutes which are procedural or remedial, in the strict sense, should be liberally construed.."⁶

The Common Law

As to what precisely represents the common law with respect to the consequences of the principal in respect of a Power of Attorney losing capacity, it is fair to say:

a complete statement would be difficult, the common law has wrestled with the consequences of the principal losing capacity for some time
possibilities may include termination, revocation, suspension or becoming voidable

These conclusions flow from a review of articles like Does The Agency Die When The Principal Becomes Mentally Incapacitated? by Alfred Mukatis (1983); Incompetent Principals, Competent Third Parties, and the Law of Agency by, Alexander Meiklejohn (1986); and A Theory of Agency Law by Paula J Dalley (2011), in which the consequences of incapacity are discussed in detail, including recognition of debate about matters like:-

when incapacity is to be determined (i.e. as between when the principal loses capacity or perhaps a Court determines this to have occurred) as to which
consequences of a principal loses capacity, including suspension, termination, the Power of Attorney becoming voidable etc.

Non-Durable Powers of Attorney In California, New York & Florida

In California, New York and Florida, the following provisions appear to prescribe a consequence (i.e. termination) where a principal in respect of a Power of Attorney that is not excluded from the ambit of the legislation loses capacity and the Power of Attorney has not been cast as a durable:-

in California §4155 states: “..the authority of an agent under a nondurable Power of Attorney is terminated by the incapacity of the principal to contract..” (see also §4152)
in New York, §1511 states: “..a Power of Attorney terminates when the principal becomes incapacitated, if the power of attorney is not durable…”
in Florida, §709.2109 states “..a Power of Attorney terminates when the principal becomes incapacitated, if the Power of Attorney is not durable”

As to the different approaches in the Six (6) Greater States:-

the approach in California is to speak of termination of the authority of an agent (not termination of the Power of Attorney per se)
in New York and Florida, §1511 and §709.2109 speak of termination of the Power of Attorney
in Texas, Illinois and Pennsylvania, legislation does not address the consequences of incapacity of the principal in similar terms

It seems on any view, these provisions are not intended to be an exclusive account of reasons for termination, which might also include for example:⁷

pursuant to its terms
upon grounds prescribed under legislation
upon its revocation
pursuant to a Court order

Perhaps a more interesting question may be whether these provisions in California, New York and Florida are intended to:-

exclusively prescribe the outcome in the event that the principal loses capacity, so as to define the only possible outcome in circumstances where the principal loses capacity
merely recognize one possibly outcome in the event that the principal loses capacity, so as to leave open for example, the prospect that a Power of Attorney might also be concluded to be suspended, or deemed voidable, if the principal loses capacity

Other interesting considerations might arise in California, where legislation speaks of termination of the authority of an agent, rather than termination of the Power of Attorney.

This is perhaps more interesting given that the legislation of California does not speak of termination of a Power of Attorney where no agent is appointed.⁸

Can A Durable Power Of Attorney Terminate At The Moment The Principal Lacks Capacity?

It cannot be said that every Power of Attorney that terminates at the same time that the principal loses capacity is not a durable Power of Attorney.

A Power of Attorney may terminate for unrelated reasons that coincide in time.

It might be said that:-

the notion of durable only recognizes an intention on the part of the principal that the Power of Attorney be given effect despite the principal losing capacity
any preference on the part a principal that a Power of Attorney terminate upon the principal losing capacity is distinct from a preference that the Power of Attorney not 'suffer the consequences at common law' associated with the principal losing capacity
for example, what if a principal expressed a preference that in the event that they lost capacity, their Power of Attorney not be suspended?

Recognizing for example, that a Power of Attorney the principal prefers not be suspended if they lose capacity as a durable Power of Attorney is a good starting point for perhaps answering this question.

If a principal can prescribe a preference as to possible suspension of their Power of Attorney if they lose capacity, why should they not be entitled to express a preference as to termination?

Why should there be a difficulty with:-

a principal crafting a Power of Attorney that terminates upon the principal losing capacity
the focus of attention for the purpose of determining whether a Power of Attorney is durable resting on the intention of the principal with respect to the wishes expressed in the Power of Attorney being recognized as wishes the principal wants to prevail, if the principal loses capacity
it being otherwise of no relevant consequence what the Power of Attorney provides

The concepts of durable and non-durable might well be brought together in this way and there seems little reason not to legislate to accommodate this approach.

Casting A Power of Attorney As A Durable Power of Attorney

There is a divide in approaches in terms of how a person⁹ creates a durable Power of Attorney:-

in New York, Illinois and Pennsylvania, a ‘default provision’ deems all Powers of Attorney for a person¹⁰ to be durable, unless the Power of Attorney states otherwise (substantially consistent with the ULC approach)
in California and Texas, legislation requires a durable Power of Attorney for a person¹¹ to contain an expression of durable preference (i.e words to the effect “..this Power of Attorney shall not be affected by subsequent incapacity of the principal..”)
in Florida, a ‘default provision’ operates and an expression of durable intent must be included in a durable Power of Attorney for a person¹²

More is said about the 'requisite statutory expressions' in California, Texas and Florida under the heading Requirement For Expression of Durable Preference - California, Texas & Florida below.

Durable Powers of Attorney Intended To Be Immediately Effective

The following extract represents the first part of the description of durable Powers of Attorney above:

A durable Power of Attorney¹³ that is immediately effective:-

must comply with all relevant mandatory requirements; and
if it complies with the mandatory requirements (either specifying in the Power of Attorney that it is intended to continue to operate if the principal loses capacity in California, Texas or Florida) or perhaps omitting any expression of a contrary intention in New York, Illinois or Pennsylvania):-
- is not terminated, suspended, deemed voidable or otherwise qualified in its continuing operation solely upon its terms if the principal loses capacity; and
- is effective at the time that the principal loses capacity and at all times thereafter in accordance with its terms

*The words “in accordance with its terms” are important to recognize for example, the principal says might the Power of Attorney terminates if the principal loses capacity and some other requirement is satisfied (i.e. a certain person is alive, residing in the same state or similar, perhaps that they remain married to a sibling etc) and so, a Power of Attorney may in fact potentially terminate if the principal loses capacity, if other requirements are satisfied.

Durable Powers of Attorney Intended To Be Effective In The Future

Until a Power of Attorney has become binding upon the principal:-

the Power of Attorney cannot be used
any purported acceptance of appointment by an agent cannot be effective
an agent cannot be entitled to remuneration or expenses
an agent cannot be expected to assume any duties owed to the principal, comply with any directions recorded in the Power of Attorney etc.

Prohibition In Florida

In Florida, legislation (§709.2108(3)) prohibits a Power of Attorney for a person¹⁴ that"becomes effective" at a future point in time.

California, Texas, New York, Illinois & Pennsylvania

California, Texas, New York, Illinois & Pennsylvania expressly recognize Powers of Attorney may be intended to be effective in the future:-


California	§4030 provides: ""..springing Power of Attorney” means a Power of Attorney that by its terms becomes effective at a specified future time or on the occurrence of a specified future event or contingency, including, but not limited to, the subsequent incapacity of the principal.." and “..a springing Power of Attorney may be a durable Power of Attorney or a nondurable Power of Attorney.."
Texas	Texas expressly recognizes the right to create a durable Power of Attorney that is springing (§751.203) albeit only in the context of the terms of certain certifications, without defining the term “springing Power of Attorney” or addressing the concept in direct terms in legislation
New York	5-1501B provides "If the Power of Attorney states that it takes effect upon the occurrence of a date or a contingency specified in the document, then the Power of Attorney takes effect only when the date or contingency identified in the document has occurred.."
Illinois	§2-3 provides “the principal may specify in the agency the event or time when the agency will begin or terminate..”
Pennsylvania	§5606 provides: "As to acts undertaken in good faith reliance thereon, an affidavit executed by the agent under a power of attorney stating that he did not have at the time of exercise of the power actual knowledge of the termination of the power by revocation, death or, if applicable, disability or incapacity or the filing of an action in divorce and that, if applicable, the specified future time or contingency has occurred, is conclusive proof of the nonrevocation or nontermination of the power at that time and conclusive proof that the specified time or contingency has occurred.."

Does A Common Law Rule Exist In Respect of Powers of Attorney That Become Effective In The Future

The common law providing for termination, suspension and other outcomes associated with the principal losing capacity applies to Powers of Attorney that are intended to become effective immediately upon the principal losing capacity.

However, do these common law principles also apply to a Power of Attorney that is intended to become effective at a future point in time?

Potentially, if such common law principles are applicable to Powers of Attorney that is intended to become effective at a future point in time, the applicable common law principles may vary, depending upon whether a Power of Attorney:-

has become effective at the time when the principal loses capacity
has not become effective at the time when the principal loses capacity

Powers of Attorney Intended to Become Effective In the Future Which Have Become Effective When The Principal Loses Capacity

It seems easier to accept that the common law applicable to Powers of Attorney intended to become effective immediately also applies to Powers of Attorney that are intended to become effective at a future point in time in circumstances where the Power of Attorney has become effective at the time that the principal loses capacity, given the position is somewhat tantamount to the position in respect of a Power of Attorney that intended to become effective immediately, in the sense that at the time the issue arises, the Power of Attorney is effective.

Powers of Attorney Intended to Become Effective In the Future Which Have Not Become Effective At The Time When The Principal Loses Capacity

It may be harder to accept that common law applicable to Powers of Attorney that are intended to become effective immediately also applies to Powers of Attorney that are intended to become effective at a future point in time, where that future point in time has not passed when the principal loses capacity.

In those circumstances, the document at stake is unusual.

On one view, such a Power of Attorney does not represent a set of terms that the principal intends to be binding upon the principal and as a set of terms that have not begun to operate, how can they be ended?

Difficult Issues

How does the common law accommodate the common law rule that provides for termination upon the principal loses capacity, in circumstances where the Power of Attorney has never started?

Consider, for example that:

where a document is not yet binding, what remedy can sensibly be installed at common law?
can a rule exist that that amounts to the making of a declaration it cannot be binding in the future?
would this rule be appropriate if the Power of Attorney clearly recorded another preference?

Presumably, it may be questions of this kind that led to Florida prohibiting Powers of Attorney for a person¹⁵ that are said to "become effective" at a future point in time.

Existence of Relevant Common Law

As to whether there is common law dealing with what happens to a Power of Attorney that has not yet become effective where the principal loses capacity:-

California, Texas, New York, Illinois and Pennsylvania have expressly recognized that Powers of Attorney of this design are permissible
this does not mean that such Powers of Attorney are necessarily permissible at common law

Clearly, all of the Six (6) Greater States except Florida recognize the right to create a Power of Attorney that becomes effective at a future point in time, although it might be said:-

this right only arises under legislation, such that:-
- in Texas the right to create a Power of Attorney that becomes effective at a future point in time is limited, so as to only arise in respect of durable Powers of Attorney (which by definition cannot be for a purpose excluded from the ambit of the legislation)
- in California, New York, Illinois and Pennsylvania, the right to create a Power of Attorney that becomes effective at a future point in time only exists where a Power of Attorney not excluded from the ambit of the legislation
this right exists at common law, such that in Texas, California, New York, Illinois or Pennsylvania, any Power of Attorney may be said to become effective at a future point in time

Anyone contemplating the creation of a Power of Attorney that becomes effective at a future point in time, which is either: (a) not durable (and not for an excluded purpose) in Texas; or (b) for an excluded purpose in California, New York, Illinois or Pennsylvania would be well advised to consider the risk that their Power of Attorney be concluded to be ineffective, or otherwise subject to some outcome that the principal does not prefer, if the right to create a Power of Attorney that becomes effective at a future point in time only arises under legislation.

Powers of Attorney That Become Effective At A Future Point In Time - Conclusion

The following seems to be a fair account of the position in in California, Texas, New York, Illinois and Pennsylvania with respect of a durable Power of Attorney¹⁶ that is intended to be effective in the future:

A durable Power of Attorney¹⁷ that is intended to become effective in the future:-

must comply with all relevant mandatory requirements; and

if it complies with the mandatory requirements (either specifying in the Power of Attorney that it is intended to continue to operate if the principal loses capacity in California, Texas or Florida) or perhaps omitting any expression of a contrary intention in New York, Illinois or Pennsylvania), is not terminated, suspended, deemed voidable or otherwise qualified in its continuing operation solely upon its terms if the principal loses capacity, whether or not the principal loses capacity before or after the future point in time when the Power of Attorney is intended to become effective

*The words “solely upon its terms” are important to recognize for example, the principal says might the Power of Attorney terminates if the principal loses capacity and some other requirement is satisfied (i.e. a certain person is alive, residing in the same state or similar, perhaps that they remain married to a sibling etc) and so, a Power of Attorney may in fact potentially terminate if the principal loses capacity, if other requirements are satisfied.

Expression of Durable Preference (California, Texas & Florida)

As noted above under the heading Casting A Power of Attorney As A Durable Power of Attorney there are two approaches to creating a durable Power of Attorney.

New York, Illinois and Pennsylvania

In New York, Illinois and Pennsylvania, there is no requirement to evidence such a preference on the part of the principal in a durable Power of Attorney,¹⁸ a Power of Attorney being assumed to be intended by the principal to be durable, unless it provides otherwise.

There is no need to include an expression of durable preference.

California, Texas and Florida

In California, Texas and Florida:-

a durable Power of Attorney¹⁹ must evidence a preference on the part of the principal that the Power of Attorney not terminate immediately upon the principal losing capacity as a matter of unqualified necessity at common law (adopting the nuances of possible suspension or voidability, grouping them with the notion of termination in this context, even if this 'grouping' must be inferred where only the notion of "termination" is cited)
it is said that certain words, or words to similar effect as those words are required to be included in a durable Power of Attorney,²⁰ being words referred to in this Wiki as an “expression of durable preference”

The expressions of durable preference in California, Texas and Florida are:


State	Expression of Durable Preference
California	This Power of Attorney shall not be affected by subsequent incapacity of the principal OR This Power of Attorney shall become effective upon the incapacity of the principal (§4124)
Texas	This Power of Attorney is not affected by subsequent disability or incapacity of the principal OR This Power of Attorney becomes effective on the disability or incapacity of the principal (§751.0021)
Florida	This durable Power of Attorney is not terminated by subsequent incapacity of the principal except as provided in Chapter 709, Florida Statutes (§709.2104)

In California and Texas there are two slightly different alternatives:-

the first formula of words recognizes that a Power of Attorney will not terminate if the principal loses capacity
the second formula of words recognizes that a Power of Attorney may be said to "become effective" (i.e become binding upon the principal) at the time the principal loses capacity, (notwithstanding that there is no reason for example, it might not be said to "become effective" upon being properly executed by the principal and merely authorize agents to only commence performing certain tasks from some future point in time)

Florida presumably does not recognize the second formula of words because of the prohibition in Florida upon creating Powers of Attorney that "become effective" at a future point in time (§709.2108(3)).

Narrow Focus of Requisite Preference in California, Texas and Florida

It might be said that the required intention in California, Texas and Florida is confined.

That is, what is required is only a preference on the part of the principal that their Power of Attorney²¹ not terminate (or be suspended or become voidable) at common law at the first moment that the principal loses capacity.

The purpose of expressing the relevant intention appears to go no further than overcoming any common law rule which might result in the Power of Attorney terminating (or being suspended or becoming voidable) at the precise moment that the principal loses capacity, if the principal loses capacity in the future, leaving the principal to otherwise define when the Power of Attorney will terminate as they see fit.

A prudent principal would evidence this intention seizing upon words along the lines of the expression of durable preference cited in the legislation of the relevant state.

This would be correct if the rule at stake was simply that a Power of Attorney terminates upon the principal losing capacity, which cannot occur twice and so, upon the first occurrence of incapacity the opportunity to ever need to consider the position at any subsequent point in time is lost.

As to what might be said against this notion, the starting point is to recognize the position is not the same where for example, a Power of Attorney is found to be suspended upon the principal losing capacity.

If suspension be a consequence at common law, it is possible that suspension may occur on more than one occasion and consequently, the requisite intention is not usefully confined to the first moment the the principal loses capacity, but rather should be tied to “any time” at which the principal lacks capacity, so to speak.

Durable Preference Not Required In Perpetuity

An expression of durable preference is not required to be expressed in perpetual terms.

That is, there is no requirement that the principal intends the Power of Attorney to continue ad infinitum (i.e. forever into the future).

Where a Power of Attorney says it does not terminate at the moment that the principal losing capacity, it might yet say that:-

it terminates in a million other situations some of which may involve the principal lacking capacity or otherwise
it is intended to continue until revoked by the principal

What matters is that it is clear that the principal intends that the Power of Attorney not terminate or suffer any other common law consequence, importantly at the first moment that the principal lacks capacity and subsequently, where any common law consequence may arise at any subsequent point in time, if this be possible.

Purpose for Power of Attorney Is Irrelevant - Only Preference Matters

A durable Power of Attorney²² might provide that it authorizes agents to perform tasks:-

when the principal has capacity, or
when a principal lacks capacity, or
whether or not the principal has capacity

Perhaps a durable Power of Attorney²³ is being used:-

in a single, sophisticated or simple transaction
in an estate plan to appoint someone on a ‘forever basis’ if the principal loses capacity
by someone mentally ill to authorize agents to only performed tasks when the principal has capacity (as in the Case Study - Mental Illness)

It doesn't matter when or how the Power of Attorney authorizes tasks to be performed, or what remuneration, good faith defences or conditions of appointment it includes.

All that matters is that principal intends that the Power of Attorney²⁴ will not terminate at any moment that the principal loses capacity, entitling the principal to assume:

any reader will give effect to the Power of Attorney, including whatever it might say with respect to termination
a “four corners rule” will be applied granting the agent authority to do precisely what is recorded in the Power of Attorney

Determining the Principal's Preference

To determine the principal's intention, we need not look further than to confirm that the Power of Attorney:-

is not excluded from the ambit of the legislation
specifies in the Power of Attorney that it is intended to continue to operate if the principal loses capacity (in California, Texas or Florida) or omits any expression of a contrary intention (in New York, Illinois or Pennsylvania)
complies with all mandatory requirements

If these requirements are satisfied, it seems the principal's intention is to create a durable Power of Attorney

Examples Illustrating Durable Preference

See the Case Study - Mental Illness and Case Study - Further Examples of Durable Powers of Attorney for examples of durable Powers of Attorney.

Key Concepts

In the context of durable and non-durable Powers of Attorney, the following issues are worthy of discussion.

Whether The Power of Attorney Terminates At The First Moment That The Principal Loses Capacity

By focusing on this point in time, the reader of a Power of Attorney applies their mind to the pertinent consideration.

It is this point in time that is affected by the 'common law rule' sought to be abrogated by the legislation, accepting that:

in California, Texas & Florida there is a requirement for the principal to expressly state their preference
in New York, Illinois and Pennsylvania, a preference on the part of the principal is assumed, unless the Power of Attorney provides otherwise

The Terms “effective" & “binding on the principal” Should Be Interchangeable

A consistent practice of using the term "effect" in all its shades (i.e including "effective", "effectiveness" etc.) when dealing with the concepts at stake is important.

Using other terminology, like "continuing operation", "being on foot", "being operational" and similar which might do the same work as expressions like "continuing to be effective" or "being effective" and similar, however:-

the word “effect” is used prodigiously in the legislation of the Six (6) Greater States when referring to the ‘operative state’ of a Power of Attorney
this is shown by Appendix 1 - References to 'Effect', identifying the many references to “effect” in this context, in the legislation

A Word About Florida

It is not possible to create a Power of Attorney²⁵ that "becomes effective" at a future time in Florida: §709.2108(3).

One incident of the legislation of Florida is that:-

it may be harder to say a Power of Attorney is not intended to be effective immediately, after all, this is prohibited
principles that support interpretations of legislation that assume we all intend to comply with legislation may lend themselves to the conclusion that any Power of Attorney in Florida that is ‘silent on the issue’ is intended to be immediately binding

Absence Of Regard To Capacity Of The Principal

The description of a durable Power of Attorney above does not focus upon the capacity of the principal, only the principal's intention.

This is discussed in more detail under the heading Purpose for Power of Attorney Is Irrelevant - Only Preference Matters above.

Continued Operation According To Its Terms

The words “other than according to its terms” are important in the description of a durable Power of Attorney above because they acknowledge that:-

whatever the principal intends with respect to terminates at the moment that the principal loses capacity, the principal may have other intentions with respect to termination that the principal records in the Power of Attorney
so for example, a Power of Attorney might say it terminates:-
- exactly 48 hours after the principal loses capacity, which would be a durable Powers of Attorney because it he is intended to survive the principal loses capacity, notwithstanding thatit terminates a short time later
- when the principal loses capacity, if Mary Smith is still married to Roy Robert Snr
- if the principal loses capacity at a certain location, or by a certain means etc.

Determining If A Power of Attorney Is Durable Or Non-Durable

In all of the Six (6) Greater States there is a distinction drawn between durable and non-durable Powers of Attorney for persons.

Putting aside for a moment exactly how the dividing line is drawn, it is clear that the distinction often has consequences.

determining whether a Power of Attorney is durable or non-durable involves reading a Power of Attorney as a whole and ensuring that it complies with all mandatory requirements
deciding whether to cast a Power of Attorney as durable or non-durable has consequences, perhaps result in a Power of Attorney attracting the operation of certain legislative provisions

Reading As A Whole

A single set of words in a Power of Attorney may not be definitive when determining if a Power of Attorney for a person is durable or non-durable.

For example, a Power of Attorney might contain provisions that read on their own justify the conclusion that the Power of Attorney is or is not durable, when upon a reading of the Power of Attorney as a whole, the alternative conclusion is justified.

A Special Consideration In Texas

Unlike any of the other five (5) of the Six (6) Greater States, the legislation of Texas includes §751.003 which provides:

"This subtitle shall be applied and construed to effect the general purpose of this subtitle, which is to make uniform to the fullest extent possible the law with respect to the subject of this subtitle among states enacting these provisions.."

If the approach to durable and non-durable Powers of Attorney set out in this Wiki is a cogently universal for the Six (6) Greater States, §751.003 in Texas may support this approach being adopted in Texas, even if it does not accord with the law of Texas as it was prior to 2018, when §751.003 was enacted.

SOME HANDY REFERENCES

California

Requirement for Inclusion of Expression Of Durable Preference

Similar to Texas and Florida, in California an expression of durable preference is required to be included in a durable Power of Attorney²⁶.

§4018 provides that a durable Power of Attorney²⁷ is a Power of Attorney that satisfies the requirements of durable in §4124.

§4124 requires inclusion of certain words:-

"A durable power of attorney is a power of attorney by which a principal designates another person as attorney-in-fact in writing and the power of attorney contains any of the following statements:

(a) “This power of attorney shall not be affected by subsequent incapacity of the principal.”

(b) “This power of attorney shall become effective upon the incapacity of the principal.”

(c) Similar words showing the intent of the principal that the authority conferred shall be exercisable notwithstanding the principal's subsequent incapacity."

Description of Durable (Proscriptive)

§4124 states:

"A durable power of attorney is a power of attorney by which a principal designates another person as attorney-in-fact in writing and the power of attorney contains any of the following statements:

(a) “This power of attorney shall not be affected by subsequent incapacity of the principal.”

(b) “This power of attorney shall become effective upon the incapacity of the principal.”

(c) Similar words showing the intent of the principal that the authority conferred shall be exercisable notwithstanding the principal's subsequent incapacity."

Prescription That Non-Durable Power Of Attorney Terminates Upon Principal Losing Capacity

Legislation refers variously to non-durable Powers of Attorney and says in §4155:-

"..the authority of an [agent] under a nondurable Power of Attorney is terminated by the incapacity of the principal to contract.."

Other Provisions

§4022 provides:-

"A power of attorney may be durable or nondurable.."

§4030 provides:-

“..a springing Power of Attorney may be a durable Power of Attorney or a nondurable Power of Attorney.."

"..springing Power of Attorney” means a Power of Attorney that by its terms becomes effective at a specified future time or on the occurrence of a specified future event or contingency, including, but not limited to, the subsequent incapacity of the principal.."

Observations

It might be said the description of durable is more a method and approach to creation than a description.

Texas

Requirement for Inclusion of Expression Of Durable Preference

Similar to California and Florida, in Texas an expression of durable preference is required to be included in a durable Power of Attorney²⁸.

§751.002 states:

"(4) “Durable power of attorney” means a writing or other record that complies with the requirements of §751.0021(a) or is described by §751.0021(b)."

§751.0021 requires inclusion of certain words:-

"An instrument is a durable power of attorney for purposes of this subtitle if the instrument..

(3) contains:

(A) the words:

(i) “This power of attorney is not affected by subsequent disability or incapacity of the principal”; or

(ii) “This power of attorney becomes effective on the disability or incapacity of the principal”; or

(B) words similar to those of Paragraph (A) that clearly indicate that the authority conferred on the agent shall be exercised notwithstanding the principal's subsequent disability or incapacity.."

Description of Durable (Proscriptive)

§751.002 states:

"(4) “Durable power of attorney” means a writing or other record that complies with the requirements of §751.0021(a) or is described by §751.0021(b)."

Legislation Does Not Prescribe That A Non-Durable Power Of Attorney Terminates Upon Principal Losing Capacity

The legislation in Texas only relates to durable Powers of Attorney²⁹ and makes no reference to non-durable Powers of Attorney.

The legislation makes no reference in the context of termination to incapacity of the principal.

In particular, §751.131 and §751.132 deal with termination of a Power of Attorney and termination as against an agent respectively, noting:-

§751.131 is the equivalent of §709.2109 in Florida ;and
§751.131 contains no words similar to the words "..a Power of Attorney terminates when.. the principal becomes incapacitated, if the Power of Attorney is not durable.." found in §709.2109)

Legislation Contains No Substantive Reference To Non-Durable Powers of Attorney

Legislation makes no reference to non-durable Powers of Attorney, being legislation that in Texas, only relates to durable Powers of Attorney.

Observations

It might be said the description of durable is more a method and approach to creation than a description.

New York

Absence of Requirement for Inclusion of Expression Of Durable Preference

Similar to Illinois and Pennsylvania, in New York a Power of Attorney³⁰ is durable unless it expressly provides that it is terminated upon the principal losing capacity.

§5-1501A provides that "a Power of Attorney is durable unless it expressly provides that it is terminated by the principal losing capacity”.

Description of Durable (Default Provision)

§5-1501A provides that "a Power of Attorney is durable unless it expressly provides that it is terminated by the principal losing capacity”.

§1511 provides that “..a Power of Attorney terminates when the principal becomes incapacitated, if the Power of Attorney is not durable…”

Legislation Contains No Substantive Reference To Non-Durable Powers of Attorney

Other than in §5-1504 dealing with third party enforcement regime, legislation contains no reference to non-durable Powers of Attorney.

That said, §1511 (cited below) refers to a Power of Attorney that is "not durable”.

Prescription That Non-Durable Power Of Attorney Terminates Upon Principal Losing Capacity

§1511 provides that “..a Power of Attorney terminates when the principal becomes incapacitated, if the power of attorney is not durable…”

Combined Effect Of §5-1504 & §5-1511 - Unless Contains Provision That Terminates Upon Principal Losing Capacity Is Durable - If Not Durable Terminates on Loss of Capacity

"a Power of Attorney is durable unless it expressly provides that it is terminated by the principal losing capacity” (§5-1501A)
§1511 provides that “..a Power of Attorney terminates when the principal becomes incapacitated, if the Power of Attorney is not durable…”

New York seems to be the closest to the approach taken in the 2006 ULC Recommendations, accepting that:

New York prefers not to include the defined term “durable” in its definitions (cited in §102 of the 2006 ULC Recommendations)
New York has not imposed any requirement for inclusion of an expression of durable intent

Observations

It might be submitted that the approach in New York is not ideal, because it fails to adequately account for conditional termination, as discussed in the Case Study - Conditional Termination.

For example, things become difficult where a Power of Attorney might say “..in the event that the principal lacks capacity and Bill Smith is appointed as an agent, this Power of Attorney will not terminate upon the principal losing capacity and if Bill Smith is not appointed as an agent, this Power of Attorney will terminate upon the principal losing capacity..".

In this situation, it might be said somehow that the Power of Attorney satisfies the expression “terminates when the principal becomes incapacitated” and yet, there are other outcomes and accordingly, such a Power of Attorney would be durable.

Florida

Requirement for Inclusion of Expression Of Durable Preference

Similar to California and Texas, in Florida an expression of durable preference is required to be included in a durable Power of Attorney³¹.

§709.2104 states:-

".. a power of attorney is durable if it contains the words: “This durable power of attorney is not terminated by subsequent incapacity of the principal except as provided in Chapter 709, Florida Statutes,” or similar words that show the principal's intent that the authority conferred is exercisable notwithstanding the principal's subsequent incapacity."

Description of Durable (Default Provision)

§709.2102 states:-

“Durable” means, with respect to a power of attorney, not terminated by the incapacity of the principal."

Legislation Contains No Substantive Reference To Non-Durable Powers of Attorney

Legislation makes no reference to non-durable Powers of Attorney.

Prescription That Non-Durable Power Of Attorney Terminates Upon Principal Losing Capacity

§709.2109 states that “..a Power of Attorney terminates when the principal becomes incapacitated, if the Power of Attorney is not durable”

Observations

Florida is the only state to adopt a default provision and also require inclusion of an expression of durable intent.

Illinois

Requirement for Inclusion of Expression Of Durable Preference

Similar to New York and Pennsylvania, in Illinois a Power of Attorney³² is durable unless it expressly provides that it is terminated upon the principal losing capacity.

§2-5 states:-

“Unless the agency states an earlier termination date, the agency continues.. notwithstanding … the principal's disability or incapacity.”

Description of Durable (Default Provision)

Legislation makes virtually no reference to the term "durable".

Legislation Contains No Substantive Reference To Non-Durable Powers of Attorney

Legislation makes no reference to non-durable Powers of Attorney.

Prescription That Non-Durable Power Of Attorney Terminates Upon Principal Losing Capacity

Legislation does not include a prescription to the effect that a non-durable Power of Attorney terminates if the principal becomes incapacitated.

Observations

On a literal interpretation of §2-5:-

it would be a pre-requisite to creating a non-durable Power of Attorney that it contains an actual date, said to be a date upon which the Power of Attorney terminates
anything less would on its face, fall afoul of §2-5 having failed to include such a date, resulting in the Power of Attorney continuing, notwithstanding any future disability or incapacity on the part of the principal (pursuant §2-5)

The answer to any conundrum this might otherwise have produced, for example where a principal wants to create a non-durable Power of Attorney in terms not involving a date, is found in §2-4 which states: “..the principal may specify in the agency the event or time when the agency will begin and terminate, the mode of revocation or amendment and the rights, powers, duties, limitations, immunities and other terms applicable to the agent and to all persons dealing with the agent, and the provisions of the agency will control notwithstanding this Act..”, the implications of which seem to be that an expression of the kind referred to in the second bullet paragraph above dealing with a Power of Attorney terminating upon the principal losing capacity would be given effect.

Pennyslvania

Requirement for Inclusion of Expression Of Durable Preference

Similar to New York and Illinois, in Pennsylvania a Power of Attorney³³ is durable unless it expressly provides that it is terminated upon the principal losing capacity.

§5601.1 states: “..unless specifically provided otherwise in the Power of Attorney, all Powers of Attorney shall be durable as provided in §5604..”

§5604 states:-

(a) Definition.--A durable power of attorney is a power of attorney by which a principal designates another his agent in writing. The authority conferred shall be exercisable notwithstanding the principal's subsequent disability or incapacity. A principal may provide in the power of attorney that the power shall become effective at a specified future time or upon the occurrence of a specified contingency, including the disability or incapacity of the principal.

(b) Durable power of attorney not affected by disability or lapse of time. --All acts done by an agent pursuant to a durable power of attorney during any period of disability or incapacity of the principal have the same effect and inure to the benefit of and bind the principal and his successors in interest as if the principal were competent and not disabled. Unless the power of attorney states a time of termination, it is valid notwithstanding the lapse of time since its execution.

The mandatory notice in §5601 states:-

“Your agent may exercise the powers given here throughout your lifetime, even after you become incapacitated, unless you expressly limit the duration of these powers or you revoke these powers or a court acting on your behalf terminates your agent's authority.

Description of Durable (Default Provision)

§5604 states:-

Legislation Contains No Substantive Reference To Non-Durable Powers of Attorney

Legislation makes no reference to non-durable Powers of Attorney.

Prescription That Non-Durable Power Of Attorney Terminates Upon Principal Losing Capacity

Legislation does not include a prescription to the effect that a non-durable Power of Attorney terminates if the principal becomes incapacitated.

Observations

It might be said the description of durable is more a method and approach to creation than a description.

Appendix 1: References to “Effect”

The expression “become effective” or term "effect" and similar terminology features in important respects in the legislation of the Six (6) Greater States.

California

The term “springing Power of Attorney” is defined as a Power of Attorney that by its terms “becomes effective”at a specified future time or on the occurrence of a specified future event or contingency, including, but not limited to, the subsequent incapacity of the principal..(§4030)

The required expression of durable intent in §4124 which states “This Power of Attorney shall become effective upon the incapacity of the principal..”

The government form in §4128 states: “when effective, this durable Power of Attorney will give your agent the right to deal with property that you now have or might acquire in the future..”

§4129 states: “..a springing Power of Attorney containing the designation described in subdivision (a) becomes effective when the person or persons designated in the Power of Attorney execute a written declaration under penalty of perjury that the specified event or contingency has occurred, and any person may act in reliance on the written declaration without liability to the principal or to any other person, regardless of whether the specified event or contingency has actually occurred”

§4307 states: “a copy of a Power of Attorney certified under this section has the same force and effect as the original Power of Attorney”

§4402 dealing with an third party acting in good faith without knowledge of revocation of a Power of Attorney states: “is not effectiveas to a third party until the third party learns of the revocation in place of the sentence Revocation of the Power of Attorney is not effective as to a third party until the third party has actual knowledge of the revocation, in which case the form shall be interpreted as if it contained the sentence Revocation of the power of attorney is not effective as to a third party until the third party has actual knowledge of the revocation”

§4404 states: “a statutory form Power of Attorney legally sufficient under this part is durable to the extent that the power of attorney contains language, such as This Power of Attorney will continue to be effective even though I become incapacitated, showing the intent of the principal that the power granted may be exercised notwithstanding later incapacity..”

§4405 states:

"(a) a statutory form Power of Attorney under this part that limits the power to take effect upon the occurrence of a specified event or contingency, including, but not limited to, the incapacity of the principal, may contain a provision designating one or more persons who, by a written declaration under penalty of perjury, have the power to determine conclusively that the specified event or contingency has occurred
(b) A statutory form Power of Attorney that contains the provision described in subdivision (a) becomes effective when the person or persons designated in the Power of Attorney execute a written declaration under penalty of perjury that the specified event or contingency has occurred, and any person may act in reliance on the written declaration without liability to the principal or to any other person, regardless whether the specified event or contingency has actually occurred
..Subdivisions (a) and (b) do not provide the exclusive method by which a statutory form Power of Attorney under this part may be limited to take effect upon the occurrence of a specified event or contingency"

Texas

The required expression of durable intent in §751.0021 states “..this Power of Attorney becomes effective on the disability or incapacity of the principal..”

§751.0021 confirms that a photocopy or electronically transmitted copy of an original durable Power of Attorney has the same “effect” as the original instrument and may be relied on, without liability, by a person who is asked to accept the durable Power of Attorney to the same extent as the original.

§751.203 in the context of agent's certifications states: "if under its terms the Power of Attorney becomes effective on the disability or incapacity of the principal, the person to whom the Power of Attorney is presented may request that the certification include a written statement from a physician attending the principal that states that the principal is presently disabled or incapacitated.."

§751.209 dealing with good faith third party reliance includes the words: “the Power of Attorney were genuine, valid, and still in effect”.

New York

The date on which an agent's signature is acknowledged is the “effective date” of the Power of Attorney as to that agent provided, however, that if two or more agents are designated to act together, the Power of Attorney takes “effect” when all the agents so designated have signed such Power of Attorney with their signatures acknowledged (§5-1501B).

If the Power of Attorney states that it “takes effect” upon the occurrence of a date or a contingency specified in the document, then the Power of Attorney “takes effect” only when the date or contingency identified in the document has occurred, and the signature of the agent acting on behalf of the principal has been acknowledged (§5-1501B).

In the context of good faith reliance §5-1504 provides: “may rely upon the Power of Attorney as if the Power of Attorney were genuine, valid and still in effect, the agent's authority were genuine, valid and still in effect".

In the context of affirmations provided by an agent to a third party, “..execute an acknowledged affidavit.. stating that the Power of Attorney is in full force and effect..” §5-1504.

Florida

A Power of Attorney for a person³⁴ that “becomes effective” at a future point in time or upon the occurrence of a contingency is prohibited (§709.2108(3)).

Illinois

In Illinois, the government form in §3-3 contains the notations:

“Absent amendment or revocation, the authority granted in this Power of Attorney will become effective at the time this power is signed and will continue until your death, unless a limitation on the beginning date or duration is made by initialing and completing one or both of paragraphs 6 and 7.. This Power of Attorney shall become effective on …............................................................... (NOTE: Insert a future date or event during your lifetime, such as a court determination of your disability or a written determination by your physician that you are incapacitated, when you want this power to first take effect)
“Unless you specifically limit the period of time that this Power of Attorney will be in effect your agent may exercise the powers given to him or her throughout your lifetime, both before and after you become incapacitated..”
“This Power of Attorney will not be effective unless it is signed by at least one witness and your signature is notarized, using the form below. The notary may not also sign as a witness”

Pennsylvania

§5602 confirms that a photocopy or electronically transmitted copy of an originally executed Power of Attorney has the same “effect” as the original.

§5604 affirms the entitlement of a principal to create a Power of Attorney that shall “become effective” at a specified future time or upon the occurrence of a specified contingency, including the disability or incapacity of the principal".

In dealing involving good faith reliance by a third party, §5604 affirms a third party may rely upon the Power of Attorney as if the Power of Attorney and agent's authority were genuine, valid and still in “effect”.

§5613 recognizes that the meaning and “effect” of a Power of Attorney is determined by the law of the jurisdiction indicated in the Power of Attorney.

Outside The Scope Of This Wiki Page

Powers of Attorney For Commercial Entities

The analysis on this page is of no relevance to a Power of Attorney for a commercial entity:-

a commercial entity has no purpose for the concept of capacity as it applies to durable Powers of Attorney:-
it is unhelpful to speak of durable or non-durable Powers of Attorney when speaking about Powers of Attorney for a commercial entity

Powers of Attorney For Persons Excluded From Ambit of Legislation

Powers of Attorney for a person that are excluded from the ambit of the legislation are excluded from the ambit of the information on this page.

Where a Power of Attorney for a person that is excluded from the ambit of the legislation:-

particular care is required given in particular, they remain substantially governed solely by common law of which important parts have been modified by legislation in the Six (6) Greater States
where the relevant modifications do not apply to a Power of Attorney, the information on this page may not apply

The next page examines the role and usefulness of government forms.

See for example, the article by Moses & Singer LLP dated March 8, 2021 and titled Big Changes to New York’s Power of Attorney Law Are Coming June 13, 2021 under the heading “Unanswered Questions” towards the end of the article, identifying questions arising from the recent changes to the laws relating to Powers of Attorney in New York, which became effective on June 13, 2021. ↩︎
Being a Power of Attorney for a person that is not excluded from the ambit of the legislation - click here to read more. ↩︎
Ibid. ↩︎
See the discussion at page 893 of The Rationale of Agency by Warren Seavey (1920) ↩︎
See The Durable Power of Attorney's Place In The Family of Fiduciary Relationships by Karen E Boxx (2001) at page 6. ↩︎
See for example, Fordham and Leach at page 452. ↩︎
See the Table Summary - Legislative Grounds for Termination ↩︎
As compared to say, Texas, New York and Florida where §751.131, §5-1511 and §709.2109 respectively speak of termination of a Power of Attorney where no agent is appointed, accepting that §751.131 in Texas only operates in respect of a durable Power of Attorney (which cannot be a Power of Attorney excluded from the ambit of the legislation) and §5-1511 and §709.2109 in New York and Florida respectively only apply to Powers of Attorney not excluded from the ambit of the legislation). ↩︎
Being not a Power of Attorney that is excluded from the ambit of the legislation - click here to read more. ↩︎
Being not Powers of Attorney that are excluded from the ambit of the legislation - click here to read more. ↩︎
Being not a Power of Attorney that is excluded from the ambit of the legislation - click here to read more. ↩︎
Ibid. ↩︎
Being a Power of Attorney for a person that is not excluded from the ambit of the legislation - click here to read more. ↩︎
Being a Power of Attorney that is not excluded from the ambit of the legislation - click here to read more. ↩︎
Being a Power of Attorney that is not excluded from the ambit of the legislation - click here to read more. ↩︎
Being a Power of Attorney for a person that is not excluded from the ambit of the legislation - click here to read more. ↩︎
Being a Power of Attorney for a person not for a purpose excluded from the ambit of the legislation - click here to read more. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Being not a Power of Attorney excluded from the ambit of the legislation. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Being Powers of Attorney for a person that are not excluded from the ambit of the legislation. ↩︎
Being not a Power of Attorney for a person that is excluded from the ambit of the legislation. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Being not a Power of Attorney that is excluded from the ambit of the legislation ↩︎

Durability - An Exposé

Scope of Analysis

Part 1: General Aspects

An Introductory Description Of A Durable Power Of Attorney

A Durable Power Of Attorney May Be Used In Lots Of Situations

Use In Estate Planning

Use In Transactions

Use In Simpler Transactions

Use In Sophisticated Transactions

Use In A Risk Management Context

Historical Developments Account For The Need For Durable Powers of Attorney

Durable Powers of Attorney Are Sophisticated Legal Instruments

There Are Challenges Dealing With Lack of Capacity

Considerations To Be Balanced

Troubling Nature of Potential Problems

Compounding Nature Of The Problem

Significance of Family Relations

Addressing The Problem

Suitable Terms

Regular Audit Arrangements

Regular Audit Arrangements Tend To Prevent Unnecessary Legal Proceedings

A Special Word About New York

The Global Experience Is Wide And Varied

The ULC Approach

Capacity At Execution

Freedom of Choice Is Important

A Special Word About Illinois

Creature of Statute

Do We Really Need Durable And Non-Durable Powers of Attorney?

Uniform Mandatory Requirements

If A Definition of "Durable" Is Needed

In Texas, Casting A Power of Attorney As Durable Has Special Advantages

Complexities

Transient Nature of Incapacity

Failure to Comply With Mandatory Requirements

Fallacies & Shortcomings Repaired

Fallacy: Focus Rests Upon The Authority of Agents

Fallacy: Durable Arrangements Work Similarly In All States

Fallacy: A Durable Power of Attorney Must Always Be Used To Authorize An Agent To Perform Tasks When The Principal Lacks Capacity

Shortcomings With Alternative Descriptions of “Durable”

Lesser Alternative 1: "..a durable Power of Attorney is a Power of Attorney authorizing agents to perform tasks if the principal lack capacity”

Lesser Alternative 2: "..a durable Power of Attorney is a Power of Attorney authorizing agents to perform tasks after any future point in time that the principal lacks or may lack capacity”

Solving The Fundamental Problem

A New Kind Of Insurance Scheme

Revision of Government Forms

Part 2: Technical Aspects

What Is A Durable Power of Attorney?

Determining When A Power of Attorney Is Intended to Be Effective

Remedial Nature of Legislation

The Common Law

Non-Durable Powers of Attorney In California, New York & Florida

Can A Durable Power Of Attorney Terminate At The Moment The Principal Lacks Capacity?

Casting A Power of Attorney As A Durable Power of Attorney

Durable Powers of Attorney Intended To Be Immediately Effective

Durable Powers of Attorney Intended To Be Effective In The Future

Prohibition In Florida

California, Texas, New York, Illinois & Pennsylvania

Does A Common Law Rule Exist In Respect of Powers of Attorney That Become Effective In The Future

Powers of Attorney Intended to Become Effective In the Future Which Have Become Effective When The Principal Loses Capacity

Powers of Attorney Intended to Become Effective In the Future Which Have Not Become Effective At The Time When The Principal Loses Capacity

Difficult Issues

Existence of Relevant Common Law

Powers of Attorney That Become Effective At A Future Point In Time - Conclusion

A durable Power of Attorney17 that is intended to become effective in the future:-

Expression of Durable Preference (California, Texas & Florida)

New York, Illinois and Pennsylvania

California, Texas and Florida

Narrow Focus of Requisite Preference in California, Texas and Florida

Durable Preference Not Required In Perpetuity

Purpose for Power of Attorney Is Irrelevant - Only Preference Matters

Determining the Principal's Preference

Examples Illustrating Durable Preference

Key Concepts

Whether The Power of Attorney Terminates At The First Moment That The Principal Loses Capacity

The Terms “effective" & “binding on the principal” Should Be Interchangeable

A Word About Florida

Absence Of Regard To Capacity Of The Principal

Continued Operation According To Its Terms

Determining If A Power of Attorney Is Durable Or Non-Durable

Reading As A Whole

A durable Power of Attorney¹⁷ that is intended to become effective in the future:-