What Differentiates a Durable from a Springing Power of Attorney?
A power of attorney (POA) is a legal document that names an individual authorized to act on your behalf regarding financial matters. In some states, this person may also be given the right to make medical choices for you. In New York, a separate document known as a health care proxy is required to grant someone else the ability to make important decisions regarding your medical care if you cannot make your wishes known.
A POA plays a critical role in your estate plan because it ensures that your finances will continue to be properly handled by a trusted person, even if you lose the capacity to make decisions on your own due to injury, illness, or age. Your lawyer can craft the POA to make the powers of your agent as broad or narrow as you wish. When setting up your POA, you must determine whether you want to create a durable or springing POA.
The key difference between these two documents is when they go into effect. The powers granted to an agent by a durable POA are effective immediately upon completion of the document, meaning your agent will have access to your finances while you are still fully capable of handling your own affairs. A springing POA only becomes effective once specified conditions have been met. Typically, the document will be designed to “spring” into action when the principal becomes incapacitated.
So, which variety of POA is right for you? It all depends on your personal situation and goals. A skilled power of attorney lawyer can help you weigh your choices and draft a customized document that is best suited to your needs.
What are the Advantages and Disadvantages of a Springing Power of Attorney?
If you are considering a springing power of attorney instead of a durable power of attorney, it is vital to discuss your circumstances and reasoning with your estate planning lawyer to ensure you are making an informed decision.
While a springing POA might be appropriate for some situations, it may not be the best choice for everyone. Consider the following issues when making your determination about whether to utilize a springing POA.
Springing Powers of Attorney are Not Effective Immediately
For many people, it can feel highly uncomfortable to give another individual the right to make financial decisions on their behalf before they actually require assistance.
This discomfort can cause them to opt for a springing POA to ensure the agent only takes control of their finances after their incapacitation or another clearly defined event. While this delay in the appointment of the agent may be an advantage, it can also have downsides. If you are hesitant to give your chosen representative immediate access to your finances, it may indicate a trust issue that could be a problem later. Your legal advisor can provide guidance on selecting a reliable representative to handle your affairs to reduce these concerns.
Your Agent Cannot Act Before Your Incapacitation
A potential drawback of creating a springing POA is that it does not provide the flexibility to utilize the agent’s services at any time, unlike a durable POA. Even before your incapacitation, you may find it helpful to have another person who can take financial actions on your behalf.
For example, with a durable POA, you could ask your agent to pay your bills and handle your bank account while you are out of the country, serving in the military, or taking a vacation. Your POA may also sign important documents for real estate deals or other financial transactions if you cannot be physically present due to sickness or scheduling conflicts.
Determining Incapacitation Can Take Time
A springing POA is typically drafted to go into effect once the principal is officially deemed incapacitated. However, even if the POA provides a detailed description of what constitutes incapacitation, the diagnosis typically requires confirmation by one or more doctors. If the doctors disagree or are unwilling to sign off on the diagnosis, the matter may need a court ruling to reach a resolution. The possible delays in your agent receiving their powers can cause significant legal and financial headaches for your family during an already difficult time. A durable POA does not present these issues as the document goes into effect upon completion and remains in force until the principal’s death unless it is revoked, the agent resigns, or the court terminates the agent’s powers.
How Can Careful Planning Reduce the Risks Posed by Creating a POA?
If your main reason for choosing a springing POA is to reduce the opportunity for fraud or mishandling of funds by your representative, you may need to reevaluate your choice of agent or explore other options for safeguarding your finances. Picking your designated agent is not a task to be taken lightly. While some people prefer to appoint their spouse or another close family member, it can be beneficial to look for someone with experience and skill in financial matters, such as a trusted accountant or lawyer.
You may opt to name more than one agent in your POA to provide a system of checks and balances. However, you should consult with a lawyer to learn more if this is your preference. Multiple agents can complicate matters as both agent’s signatures will be required for transactions. If you wish to ensure oversight of your agent’s actions, New York state law provides for the appointment of a monitor within your POA. The monitor can request records of the agent’s activities on behalf of the principal to make certain they are upholding their fiduciary duty.
How Can an Experienced Estate Planning Lawyer Assist You?
Ultimately, only a knowledgeable estate planning attorney can help you determine whether a durable or springing POA is right for you. At the Law Offices of Vlad Portnoy, P.C., our helpful lawyers have extensive experience guiding clients through every aspect of the estate planning process. We take the time to learn about your situation and goals so we can build a plan that is tailored to your unique needs and will protect you, your family, and your legacy. Contact our law firm today at 516-518-8586 to schedule your in-depth consultation.