You may find yourself in situations where you need someone to sign documents or authorize transactions on your behalf when you cannot do so yourself because you do not have the time, cannot be at a signing, or due to other circumstances. However, you might create a power of attorney to give a trusted loved one or advisor the authority to manage your affairs. You may have specific goals in granting another person this authority, such as helping you oversee your property and finances or handling your affairs if you become incapacitated. Your specific needs can determine whether you should create a durable or non-durable power of attorney. But how do these types of legal structures differ in Texas?
What Is a Power of Attorney?
A power of attorney lets an individual name someone else to handle their financial and legal affairs. A power of attorney creates a legal relationship between the party who drafts the POA, called the principal, and the party nominated to act on the principal’s behalf, called an agent or attorney-in-fact. A power of attorney empowers an agent to take actions on behalf of the principal as the principal could.
People may use powers of attorney to enable trusted individuals to handle matters such as:
- Buying and selling property on the principal’s behalf
- Signing contracts in the principal’s name
- Managing the principal’s financial accounts and money
A principal must have legal capacity to manage their affairs when they execute a power of attorney. A power of attorney typically lasts unless the principal revokes it. It can also terminate automatically upon the principal’s incapacity or death, unless the principal creates a special type of power of attorney called a durable power of attorney.
Durable Power of Attorney – Key Features
Under Texas law, a durable power of attorney remains in effect even if the principal becomes incapacitated. A principal can create a durable power by including language in a power of attorney document that states either:
- The power of attorney is not affected by subsequent disability or incapacity of the principal
- The power of attorney becomes effective upon the disability or incapacity of the principal
A POA can also include similar language that clearly states an agent can exercise authority under the document despite the principal’s incapacity or disability.
People typically create durable powers of attorney to authorize a family member, trusted friend, or professional advisor to handle their legal and financial affairs if they become incapacitated. Durable POAs can provide a less complicated alternative to obtaining guardianship or conservatorship for an individual who becomes incapacitated, since a durable POA can go into effect upon a person’s incapacitation. Conversely, conservatorship or guardianship will require seeking a court order authorizing a person to manage an incapacitated individual’s affairs.
How Does a Non-Durable Power of Attorney Differ?
A non-durable power of attorney differs from a durable power of attorney because non-durable POAs terminate if the principal becomes incapacitated. A person may use a non-durable power of attorney when they want to confer authority upon an agent for a specific purpose, such as to authorize the agent to sign specific documents for the principal, or when they want to ensure that the agent’s authority ends either if the principal revokes it or if they become incapacitated.
Contact Our Estate Planning Firm Today for Guidance
When you want to give a trusted family member, friend, or professional advisor the authority to manage your affairs on your behalf, a power of attorney can provide the legal tool you need. Contact Carroll Law Group, PLLC today for a free consultation with an experienced estate planning attorney to learn more about the difference between durable and non-durable powers of attorney under Texas law.