How Does a Durable Power of Attorney Actually Work? A Practical Guide

Attorney Kellen Bryant explains the practical steps for using a durable power of attorney to manage someone’s finances and affairs.

If you’ve been named as an agent in someone’s durable power of attorney document, you might be wondering: “Now what? How do I actually use this to help manage their finances and affairs?” This guide walks you through the three main areas where you’ll need to present and use your power of attorney authority.

The Three Key Areas Where You’ll Use Power of Attorney

When acting under a durable power of attorney, you’ll primarily work with three types of entities:

• Financial institutions (banks, credit unions, investment firms)
• Real estate transactions (buying, selling, or managing property)
• Government entities (Medicaid office, Social Security, etc.)

Working with Financial Institutions

Banks and other financial institutions have strict procedures when someone presents a power of attorney. Here’s what to expect:

Identity Verification

First, they’ll verify that you are actually the person named in the document. Since there might be several people with your name, they’ll require clear identification to ensure they’re dealing with the right person before giving you access to someone else’s accounts.

Legal Review Process

Don’t expect to walk into a bank branch and immediately gain access to accounts. Most financial institutions will send your power of attorney document to their legal department for review to ensure it’s legally valid and enforceable.

Sworn Statement Required

Once the document passes legal review, the bank will typically require you to sign an affidavit or sworn statement under penalty of perjury. This statement confirms that:

• The person who granted the power of attorney is still alive
• The document has not been revoked
• You have the authority to act
• You’re not acting outside the scope of your authority

Using Power of Attorney for Real Estate

A durable power of attorney can authorize you to handle various real estate matters including selling property, obtaining mortgages, or signing construction agreements. Here’s how it works for property sales:

Recording Requirements

In Florida, the original power of attorney document (with blue ink signatures) must be recorded in the public records of the county where the property is located. Title companies or real estate attorneys typically handle this process.

Proper Signing Procedures

When signing deeds or other documents, you must clearly indicate that you’re signing as power of attorney for someone else, not in your personal capacity.

Complete Documentation

All documents are recorded together to create a clear chain of authority for the transaction.

Government Entities: The Most Critical Consideration

This is where many people encounter unexpected challenges when using a power of attorney.

Some Agencies Don’t Accept Standard Forms

Certain government entities, like the VA, don’t recognize attorney-drafted durable power of attorney documents. They have their own fiduciary systems and specific forms that must be used instead.

Medicaid Applications Require Specific Language

When working with Florida’s Department of Children and Families (the Medicaid office), the power of attorney document must contain very specific language and powers. If these essential provisions are missing, caseworkers will reject the document, potentially derailing important applications for benefits.

This is particularly crucial when helping someone who is incapacitated apply for Medicaid benefits. The wrong power of attorney document can create significant delays and complications.

Key Takeaways for Success

To effectively use a durable power of attorney:

• Always keep the original document – copies may not be sufficient
• Ensure proper legal language – the document must contain the right provisions for your intended use
• Be patient with the process – institutions need time to verify and approve
• Work with professionals – title companies, attorneys, and financial advisors can help navigate requirements

The Importance of Proper Preparation

The effectiveness of a durable power of attorney depends heavily on how it’s drafted. A document that works perfectly for managing bank accounts might be inadequate for Medicaid planning or complex real estate transactions.

If you’re creating a power of attorney or discovering limitations in an existing one, consulting with an experienced elder law attorney can help ensure your document will work when you need it most.

For guidance on creating or using durable power of attorney documents, consult with qualified legal professionals who specialize in estate planning and elder law.