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A durable power of attorney lets you authorize your attorney-in-fact to do any number of things in your stead, limited only by the laws of your state. For example, he or she can be given the power to continue implementing your plan to reduce the sized of your estate with annual tax free gifts to your heirs (currently, up to $10,000 a year to an unlimited number of donees; $20,000 if your spouse consents).
However, for the IRS to permit these gifts to reduce your taxable estate, the durable power must expressly authorize your attorney-in-fact to make such gifts. You can also provide for charitable donations, payment of medical bills, and tuition disbursements. Your attorney-in-fact can, among other things: oversee trust accounts, annuities, and insurance policies; manage your investment portfolio; forgive or collect debts owed to you; file tax returns and pay taxes; represent you in legal matters; manage your business; and provide for you medical care.
Bear in mind that some financial institutions (e.g., a bank or brokerage house) will honor only powers executed on forms prepared by them. Therefore, more than one document may be required. Note also that one thing your attorney-in-fact cannot do is change your will.
Because the materials covered in this article are complicated, this article should not be regarded as offering a complete explanation and should not be used for making decisions. Any suggestion should be reviewed with your personal financial and tax advisor.