As the average age of the U.S. population increases, more people are becoming aware of the benefits of having a general durable power of attorney (POA) to insure they have someone to assist them with financial matters when they are unable to act for themselves. Actually, the benefits of creating a POA apply to all walks of life, from the young adult college student to grandparents with significant health issues. In a POA, you name a trusted person, called your agent or attorney-in-fact, to act on your behalf. Your agent has a duty to act solely on your behalf and not in their own self-interest. A general durable POA gives broad powers to the person you name to help you and will continue to operate even after you are incapacitated (cannot speak for yourself). There are two ways these POAs are usually created to put in place someone to act on your behalf.
“Springing” is a term used to describe one common type of POA. The “springing” term refers to the timing of when your agent is allowed to step in to help you. A springing POA provides that an agent cannot act until you (the principal) are determined to be incapacitated based on the criteria listed in the POA. The criteria often state that the determination of incapacity will be made by your spouse and a licensed physician, or two licensed physicians. The use of a springing POA is common when the person you named as your agent is not your spouse. You may not want to give a non-spouse agent access to your financial accounts while you still have the ability to manage your own affairs. However, some people find that the alternate type of POA, an “immediate” POA, is more useful.
An immediate POA is just that – immediate. It becomes effective as soon as you sign the POA. Your agent has the authority to decide when it is appropriate to step in to assist you with your financial matters and does not need to wait for you to be determined incapacitated under criteria listed in the POA. When your agent is your spouse, his or her role as your agent in an immediate POA likely mirrors the arrangement you already have with him or her. When your agent is someone other than your spouse, that person’s role as your agent in an immediate POA provides them access to your accounts and information that probably did not exist prior to executing the POA.
There can be many reasons why you would select one type of POA over the other. The springing POA can feel safer because your agent does not have access to your private financial and legal matters until you need them to. However, sometimes carrying out these springing POAs can be difficult. Some people will be reluctant or flat-out refuse to go to a doctor, much less two doctors, in order to be evaluated for incapacity. In some forms of dementia combativeness is a common manifestation. It is very common for a person whose mental capacity is declining to be in denial about that.
An alternative that can work well is to write the POA so that incapacity is determined by a panel of friends and family members you trust to be aware of your situation and take action when necessary. The choice of which type of POA will best suit your circumstances should be discussed with your estate planning attorney prior to creation and signing of your document.
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