General Securities Sales Supervisor (Series10) Practice Exam

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What is a characteristic of a durable power of attorney?

It ceases upon the account owner's incapacitation
It continues even if the account owner becomes mentally incapacitated
It grants the person rights strictly limited to trading
It allows writing checks only during designated times

The correct answer is: It continues even if the account owner becomes mentally incapacitated

A durable power of attorney is designed to remain in effect even if the account owner becomes mentally incapacitated. This is a crucial feature distinguishing it from a regular power of attorney, which would typically terminate if the principal loses capacity. The durability aspect ensures that the designated agent can continue to manage the account owner's financial affairs or make decisions on their behalf, providing a safeguard during periods of incapacity. This characteristic enhances the value and reliability of the durable power of attorney, as it helps to prevent the disruption of financial management at challenging times. In contrast, options that suggest the power of attorney ceases upon incapacitation or is limited to specific trading rights or designated times do not align with the true nature of a durable power of attorney and its intent to provide ongoing authority regardless of the principal's health status.