You might wish to open a sample of a Special Durable Power of Attorney in a separate window to follow along with this discussion. You will need Adobe Reader to open this PDF. You may download it here.

Paragraph 1 - This is the introductory paragraph which sets forth the full name of the person making the Durable Power of Attorney. In this particular example, the agent is designated in this paragraph. However, many Durable Powers of Attorney utilize a separate paragraph to make the designation of the agent. See, e.g., Durable Power of Attorney For Healthcare. Also, it is advisable to include the name, address and the telephone number of the agent who is being designated.

Paragraph 2 - This paragraph generally sets forth the fact that you are giving the agent certain powers. This paragraph gives an example of a large number of powers which can be given to an agent. It is advisable to review each in detail, and to make certain that you intend for your agent to have each power. If there are one or two powers that are not acceptable to you or seem irrelevant to your particular circumstances, you should leave these out of your document. Or if there are a large number of the powers listed that are not acceptable to you, this is the primary purpose for creating a Special Durable Power of Attorney, which is a more limited designation of powers to an agent.

Paragraph 2b - This is the place where the special power is stated in clear terms. Here, you can see that this Power of Attorney gives the agent a very specific power to sign documents or take any other act to facilitate the sale and transfer of title to your vehicle designated. That's it!

What can be done with this power? Presumably your agent could go to the Division of Motor Vehicles and clear up any title problems if they exist, including signing any documents on your behalf to do so. Even with such a limited power, however, your agent can take several actions that might be beyond your intention. For example, your agent could draft a contract and sign it binding you to the terms of the sale. Or the agent's power might be construed, in the absence of other evidence, to be able to fix a price for the vehicle, even if it is well below market value.

What cannot be done with this power? This power does not give your agent the right to take the vehicle on a trip first. Nor does it give your agent the right to sell your belongings in the vehicle. It does not give your agent the right to purchase insurance at your expense, except in the situation where, for some reason, it may be absolutely required to sell the vehicle or transfer title.

You can see that this specific power is much preferred, and by limiting it, you can afford great control over your affairs. The problem is that in your forward thinking mode, you may realize that someone may have to handle a number of transactions for you if you were incapacitated. Not all of these can be anticipated or specifically drafted with limiting language such as that herein. That is why more general powers may be advantageous. You may give up more control, but in the long run, you may be saving yourself, your spouse and your families thousands of dollars and many months or years in court-ordered legal expenses and time.

Paragraph 2c - Limitation of Liability for Revocation. Many financial institutions or other entities are concerned about their liability in the event your agent presents them with a properly executed Durable Power of Attorney and in reliance thereon, they take certain action. For example, they transfer $20,000 from your savings account to another bank in the form of a cashier's check. This is a perfectly legal function for your agent to do if you have given him/her this power.

But, what if unbeknownst to the bank, you have executed a Revocation of this Durable Power of Attorney the day before your agent appears at their bank without telling them about the Revocation. On one hand, you may be perfectly satisfied with this $20,000 transfer by your agent. On the other hand, what if you did not authorize this transfer, and you intended to fully revoke all of the powers which you gave to your agent. The bank does not want you coming to them after the transfer and claiming that the day before you executed a proper Revocation of the Durable Power of Attorney on which the bank relied.

To remedy this problem, this provision is making you responsible for ensuring that any Revocation of your Durable Power of Attorney is made known to all relevant persons or entities. Remember, it is not the bank's responsibility to honor your Durable Power of Attorney. By seeking to limit their liability, they are simply trying to protect themselves from having a $20,000 claim against them.

Do you absolutely have to have this provision in your Durable Power of Attorney? No. However, remember the purpose of this document is to be forward thinking and to plan for your needs if you were unable to do so yourself. If you gave your agent the power to make bank transfers or conduct other bank business, your Durable Power of Attorney would not help much if your bank refused to accept this document, because of a lack of a limitation of liability provision. [Note: since your agent has this power, it is likely that your agent might also have the power to sign (on your behalf) a limitation of liability provision provided by the Bank, at the time of the transfer, which would render the Durable Power of Attorney effective for this transfer.]

Paragraph 2d - Makes it clear that the entire purpose for creating this document is that if you become incapacitated or disabled, your agent will still have these powers.

Paragraph 2e - This is legal language that simply renders the document valid in the event that you have placed into the document a provision which is either invalid or is later declared invalid by state or federal law or court decision. Without this provision, some states have contract interpretation laws that suggest that this document would be completely invalid simply because one of the provisions, or even a part of a provision, is invalid. Generally, it is wise to have this provision in your Durable Power of Attorney.

Paragraph 2f - This language simply sets forth which state's law governs this document. Because state laws differ widely in this area, it is useful to specify which state law applies. However, you should know that simply stating it does not always, in every case, guarantee that that state law will apply for all purposes.

The examples of when other state, or even federal, law supersedes the state law designation are too numerous for this discussion. A general rule, however, is that if all of the transactions contemplated by the document, and all of the parties named or affected under the document are in the state named, it is likely that this state law provision will be relied upon in the event of a dispute. With technology and families moving all over the United States, it is certainly conceivable that this provision would not be ironclad.

Paragraph 2g - Community Property provision. This provision is merely a sample of a paragraph which governs the community property interest which you have. This provision requires that if your agent is your spouse, and is acting as your agent, your spouse must act in your best interest, with respect to your one-half interest of all community property. Remember that not all of your marital property is necessarily community property. Should you have a serious question about your community or separate property and how it is affected, or may be affected by your agent, you should consult an attorney.

Paragraph 2h - This provision is capitalized for emphasis. You should be sure that you understand what this document does, and the fact that this provision, which explains this document, is capitalized suggests that you understood how important this document is prior to executing it.

Signature Line - Once you are certain that you understand the purpose of your Durable Power of Attorney and that it has been drafted with the utmost care to enable an agent to handle your affairs, you should sign and date this document. However, as discussed below, you should be certain to sign in the presence of either a Notary Public or witnesses as required by your state's law.

Your agent should then acknowledge this document and his/her acceptance of this agency by signing as indicated.

Witnesses - Some states require that two witnesses watch a principal sign the document, and that witnesses sign a statement indicating that they did so. Samples of these can be found under the Durable Power of Attorney For Healthcare section, and can be incorporated herein.

Acknowledgement Provision - Both the Principal and Agent should sign in the presence of a Notary Public [or witnesses, or both as required by your state's law.] It is important to remember that the Notary Public is not vouching for the truth of the document. Rather, the purpose for the Notary Public is to vouch for the fact that you actually signed it, and your agent actually signed it. If the Notary is ever called into court, he/she can testify about this, as well as his/her observations at the time of signing. The court may be interested in any evidence of pressure or undue influence from the agent to make the principal sign, or to determine if, at the time of signing, the principal and the agent were of sound mind. A Notary would not, of course, know if a person were of sound mind, but could testify as to how a person acted when they observed them. This testimony might be extremely helpful in making these determinations.

Recording: Sometimes Durable Powers of Attorney are recorded with the local county or other entity, as a public record. There are substantial advantages to this recording, since it puts "the world" on notice of the existence of this Document. However, one disadvantage is that the terms of your document become a public record in some cases, and everyone learns your otherwise private business. You should seek legal counsel to assess the proper action for your individual situation. Also, some states require that this document be recorded.