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A durable power of attorney (DPOA) is one of the most important estate planning documents you can have. It allows a trusted person (your “agent” or “attorney-in-fact”) to handle your financial affairs and make decisions on your behalf, even if you become incapacitated. This can be a lifesaver in emergencies or if health issues leave you unable to manage your own affairs.
However, many mistakes people commonly make with DPOAs can render the document useless when needed most or open the door for an agent to misuse their authority. Here are ten pitfalls to avoid when creating your Texas durable power of attorney:
Mistake #1: Not using the proper statutory form
Texas has a statutory durable power of attorney form that meets all state law requirements. While you aren’t obligated to use this form, going with an alternative or outdated version risks leaving out important provisions protecting your interests.
The statutory form, helpfully, includes checkboxes for granting or withholding various powers over things like real estate, banking, business operations, insurance, estate planning, and benefits. Unless your attorney advises otherwise, it’s best to stick with the current statutory form to ensure your DPOA is comprehensive and valid.
Mistake #2: Making unauthorized changes to the statutory form
If you use the Texas statutory DPOA form, be very careful about modifying the official language. Some people try to edit or remove paragraphs, often based on advice they read online. However, even small tweaks to the statutory wording can invalidate the whole DPOA.
The form does allow for some specific “Special Instructions” where you can expand or limit certain powers. But leave the rest of the standardized language alone. If you need to make substantial changes, hire an estate planning attorney to draft a customized DPOA instead of DIYing amendments.
Mistake #3: Failing to have the DPOA properly signed and witnessed
For a Texas DPOA to be legally binding, the principal (the person granting authority to an agent) must sign the document in the presence of a notary public. Some older forms also required a specific number of witnesses, but the current statutory form only demands notarization.
Failing to follow these signing formalities to the letter can nullify the DPOA entirely. Even if the principal is incapacitated, if the document isn’t notarized, institutions like banks and hospitals can refuse to honor it. Make sure the principal signs before a valid notary and that the notary affixes their official seal.
Mistake #4: Choosing the wrong agent
Designating the right person to serve as your agent under a DPOA is critical. This person will have broad powers to access your finances, enter contracts, file lawsuits, and potentially make life-altering choices on your behalf. It needs to be someone you trust completely to act in your best interests.
Many people automatically pick their spouse or eldest child as agent. But consider if they are truly the best person for the job. Will they be too busy to carry out DPOA duties? Are they responsible with their own finances and affairs? Will they stay diplomatic under pressure from family? Don’t just go with the obvious choice without weighing the actual demands of the role.
Mistake #5: Granting overly broad or vague authority
A DPOA allows your agent to step into your shoes to handle your affairs essentially. For this reason, it’s risky to give them totally unchecked powers. The statutory form allows you to control the scope of authority by granting only certain powers from a menu of options.
Think carefully about what powers your agent realistically needs to assist you, especially over high-stakes matters like real estate, securities, loans, and business interests.
Granting broad catch-all powers can be dangerous if your agent proves incompetent or opportunistic. Work with an attorney if needed to craft Special Instructions that clearly define the extent of your agent’s powers while limiting their ability to abuse their position.
Mistake #6: Not nominating alternates or successors
If your primary agent is unable or unwilling to serve for any reason, your DPOA will be useless unless you name alternate agents. Always include at least one back-up agent, if not two or three. Properly designate the order in which these successors would take over DPOA duties.
When naming alternates, go through the same vetting process you did for the primary agent. Make sure each is willing to serve, understands their duties, and has a copy of the executed DPOA. If you only pick one alternate and both your primary and secondary choices fall through, you’re out of luck.
Mistake #7: Making a “springing” DPOA
Texas law allows you to create a “springing” DPOA that only takes effect upon the principal’s incapacitation, as certified by a physician. This option is tempting for people who dislike the idea of an agent having immediate authority over their affairs. However, springing DPOAs often cause more headaches than they’re worth.
Needing a doctor’s written verification of incapacity can severely delay an agent’s ability to act in emergencies. Doctor’s can disagree about the principal’s mental state. HIPAA privacy laws can hinder information sharing. Many banks and institutions refuse to accept springing DPOAs due to the hassle of determining if they’ve been triggered. In most cases, a durable POA that takes effect immediately is preferable to a springing one.
Mistake #8: Neglecting HIPAA authorizations
Even if your DPOA grants your agent power to make medical treatment decisions, that doesn’t mean they can access your private health information automatically. The federal Health Insurance Portability and Accountability Act (HIPAA) bars doctors, hospitals and insurers from sharing your records without an additional waiver.
Many overlook this wrinkle, which stymies agents trying to make informed choices about the principal’s care or trigger a springing DPOA. The statutory DPOA form includes a HIPAA release, but double-check that it is filled out and signed. A full HIPAA authorization can be strengthened with a properly drafted medical power of attorney.
Mistake #9: Not updating old DPOAs
An out-of-date DPOA can be almost as problematic as having no DPOA at all. Significant life changes often necessitate revisions to your estate plan. Divorces, deaths, births, new assets, moves to new states, and shifts in family dynamics can all impact who you want to serve as an agent and what powers they require.
An old DPOA might have your ex-spouse as an agent or fail to include authority over after-acquired property. Review and update your DPOA every few years at a minimum. Empower your agent to act effectively with a current, comprehensive power of attorney.
Mistake #10: Trying to DIY without professional advice
Finding fill-in-the-blank POA forms online is easier than ever in our digital age. However, a DPOA is an immensely powerful document with huge potential consequences if drafted poorly. Small oversights and imprecise language can cripple your agent’s ability to serve you or open doors for financial exploitation you never intended.
Consulting with a qualified estate planning attorney is the surest way to create a legally valid DPOA, clear in your wishes, and tailored to your circumstances. Online forms can be a helpful starting point, but shouldn’t be executed without careful review. An ounce of professional guidance is worth a pound of damage control down the road.
A durable power of attorney protects you when you’re most vulnerable. Don’t let simple mistakes transform this vital safety net into a dysfunctional mess. Follow the tips above to ensure your Texas DPOA functions seamlessly when needed.
Conclusion
A well-drafted Texas Durable Power of Attorney is crucial to a comprehensive estate plan. By avoiding common pitfalls like using outdated forms, choosing the wrong agent, granting overbroad authority, neglecting HIPAA releases, and failing to update the document regularly, you can ensure your DPOA is a reliable tool that protects your interests and empowers your loved ones to assist you in times of need. Don’t let a simply avoidable mistake derail your wishes – get professional guidance to create a rock-solid DPOA.
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FAQs
No, a durable power of attorney remains effective even if the principal becomes incapacitated, while a regular power of attorney terminates upon the principal’s incapacity.
A medical power of attorney appoints an agent to make healthcare decisions on your behalf, while a durable power of attorney grants authority over financial and legal matters.
While not required, it’s highly recommended to consult with an estate planning attorney to ensure your durable power of attorney is properly drafted, executed, and tailored to your specific needs.
Without a durable power of attorney, your family may need to go through a lengthy and expensive court process to appoint a guardian to manage your affairs if you become incapacitated.
No, a durable power of attorney only covers financial and legal matters. For healthcare decisions, you need a separate medical power of attorney.
