Immediate v. Springing Powers of Attorney
I prepare a lot of Financial Power of Attorneys for my clients. I also believe that it's close to being the most important document that you will prepare along with an Advance Healthcare Directive. When we are healthy we don't need anybody to handle our financial affairs for us; as we are able bodied and our minds are clear. However, if we are suddenly unable to manage our financial affairs, then our agent will step in and manage them for us. But is it really this easy? Who gets to say that we can no longer manage our financial affairs? Is it up to us, our agent or the doctor?
Durable Powers of Attorney can be effective immediately upon signature & notary, or may be effective at incapacity, or springing - which just means it springs into effect when we are incapacitated. The ultimate choice is up to you, however, there are some considerations to take into account before opting for "springing".
The reasons that we may want to think twice about Springing Power of Attorneys:
1. Incapacity Determination - If you decide to sign a Durable Power of Attorney that is "Springing" your agent may have a hard time getting the determination of incapacity. In order to receive the determination a doctor, or sometimes two doctors must certify your incapacity. This can be tricky in certain situations. If you do get the determination it could take a while, which may leave your finances or other personal affairs in dissaray.
2. Incapacity Defined - If you still want a springing clause you may also want to clarify what incapacity means. It seems logical to think that incapacity means that you are in a coma, but what if you have days where you are clear and some off days, what if your doctor disagrees that you are incapacitated? This can be tricky and may wind your agent/family in court, which will unfortunately delay your agent from handling your financial affairs, which could leave you in a terrible predicament.
An immediate Power of Attorney can seem like you are giving your agent the authority to go out and spend your money now, however, I think if you are worried that your agent would behave this way, then you may have picked the wrong agent.
In addition, your agent has a fiduciary duty to only act in your best interest. If you have a hard time finding who to nominate as your agent, you can also assign a company to act on your behalf.
To find out more about Powers of Attorney, Advance Healthcare Directives or any other estate planning tools, please contact me at (925) 336-5711.
I am not an attorney and cannot provide legal advice. These are my own opinions and are not to be taken as legal advice. I can provide self help services at your specific direction.