When creating a power of attorney for a potential incapacity, there are two general options regarding when the powers in the document will take effect.
One option is to have the powers listed take effect as soon as the document is signed. This is typically referred to as a standard durable power of attorney. The specified agent has the full power to act on behalf of an individual both in case the individual becomes incapacitated and before any incapacity occurs.
Another option is to only have the powers take effect once an individual becomes incapacitated. These are referred to as springing powers of attorney. The agent specified has no power until the incapacity standard listed in the document occurs.
One perceived advantage of springing powers of attorney is it gives individuals a sense of protection that as long as they have sufficient capacity, they alone have control over their own lives. Having a springing power of attorney also gives individuals a certain amount of peace of mind that if they lose capacity, someone will be able to step in and manage their affairs.
However, these perceived advantages have some significant downsides.
First, the line between capacity and incapacity is not always clear. While there are times someone will have a severe accident or sudden debilitating illness, often people will face a gradual decline in their abilities. Even for people with degenerative diseases, legal capacity may still remain for significant time after a first diagnosis. While declines generally get progressively more pronounced over time, people in decline can still have good days, weeks, or even months where their situation stabilizes or temporarily improves.
Second, the process of declaring someone incapacitated can add significant time and cost to implementing the protections the power of attorney was meant to put in place. Even if a person has lost capacity, the agent will not be able to use their powers until the person has been officially declared incapacitated. Doctors and courts can be reluctant to declare someone incapacitated precisely because declines are not clear cut. Doctors may face consequences in a case of a misdiagnosis of incapacity.
Third, even with a springing power of attorney accompanied by a declaration of incapacity, institutions may still not immediately respect the agent’s decisions. Because springing powers of attorney have no power until the definition of incapacity has been met, institutions often want additional verification and steps to be taken before they respect a springing power of attorney.
Fourth, even after the initial declaration of incapacity, financial institutions are increasingly requiring that a doctor reaffirms the incapacity every 90 days. This requirement to reevaluate the incapacity and to generate the accompanying documentation increases the burden on everyone involved.
The process of both declaring someone incapacitated and convincing the relevant institutions that the springing power of attorney is valid can prevent an agent from fully protecting an individual and their assets from potentially avoidable delays and costs. These delays and costs would not be an issue with a standard durable power of attorney with immediate powers since there is no question of whether or not the document is in effect.
Ultimately the decision to use springing or immediate powers should be made in careful consultation with an experienced elder law attorney. The attorney can guide the client through the full implications of either choice, draft tailored powers of attorney that respect the client’s informed choices and needs, and fit the documents into a larger estate plan.
To draft, or go over, your own powers of attorney, please call Martha C. Brown & Associates at (314) 583-0590.