Powers of attorney are a critical part of any estate plan, but in many situations, a springing power of attorney—that only “springs” into action should you become debilitated—might be worth thinking about.
Estate planning comprises of different kinds of documents, all of them serving a specific intent. Placing a power of attorney (POA) with your estate plan is important throughout your lifetime.
A springing POA is documentation that doesn’t go into effect instantly but instead “springs” into action should you be declared incapacitated, unable to make decisions on your own, or unable to manage of your financial requirements.
Considering a Springing Power of Attorney
A POA allows an individual, referred to as your agent or attorney in fact, to act on your behalf when you’re unavailable, or, in some cases, when you’re not of mentally capable. Whereas many individuals choose a durable POAs, in certain instances, a springing POA might be ideal for your situation.
The incident that sets off or activates a springing POA is your being declared incapacitated or unable to make decisions soundly.
It’s vital that you have a trustworthy agent to act on your behalf should you be unable to make decisions on you own. You’ll also want to choose an agent that is competent to manage financial issues and that can make other decisions on your behalf.
A POA is a crucial factor of any estate plan, even when you have a smaller estate. Devoid of having a power of attorney in place, upon your plausible incapacitation, someone would have to initiate a court action to place conservatorship or guardianship over you to oversee your affairs.
Definition of Incapacity
The issue with a springing POA is that, in a lot of states, an individual is required to declare you inept or incapable of decision making. Effective POAs include terminology that details incapacitation and how to get an individual—typically your family doctor, or 2 treating doctors—to confirm that you are incapacitated.
A springing POA should proclaim who is going to declare you incapacitated, and if the POA necessitates one or two doctors to declare incapacitation. If this isn’t detailed clearly through your POA, then the decision might end up in court, so it’s vital to define what determines your incapacitation.
Springing POA Opposed to Durable POA
A lot of attorneys prefer using a durable POA instead of a springing POA since a durable POA goes into effect the instant it is signed, and it continues even should you become incapacitated. Even when you don’t want your agent to have instant powers, attorneys suggest that you have a durable POA in place when devising your will. A lot of individuals appoint their trustworthy spouse as their agent.
Both POAs and wills are factors of good estate planning. A will won’t cover circumstances in which you’re still living but are unable to take care of yourself, but a POA will.
A durable POA enables your agent to do just about anything you would usually do on you own, particularly if the POA specifies the agent’s duties. Your agent’s responsibilities might comprise of:
- Managing your finances
- The sale of real property, if not ruled out by the POA documentation
- Tax filing for you
- Investing for you
- The sale of vehicles for you
- Bill and debt paying
- Continuing to manage your business or do what’s in your best interest in your situation, like possibly closing your business, if justified
- The collection of Social Security or other income on your behalf
- Managing insurance by either purchasing or modifying policies
Drawbacks of Springing POAs
Springing POAs take time prior to them going effect. Your agent is required to wait until the doctor(s) determine that you’re unable to manage your own affairs. Meanwhile, your bills could stay unpaid, and your finances might be in disorder until the doctors confirm that it’s time for your agent to go into action. Relatives or friends could contest your incapacity in court, so it’s typically advantageous to have a durable POA, which goes in effect instantly and isn’t often dependent on court action.
What About HIPAA issues?
The Health Insurance Portability and Accountability Act (HIPAA) deals with privacy and with what information doctors and hospitals can disclose to individuals other than the patient.
To guarantee your agent can acquire details concerning your incapacitation, sign a consent or authorization document the same time you’re signing your springing POA. This document is going to allow your agent to acquire confirmation of your incapacity from your doctor(s). Your agent is going to have to show the doctor(s) the POA document to confirm the agent is permitted to act on your behalf.
An ideal estate plan comprises of having a POA, if its durable or springing. When you have a springing POA, be sure the document specifically dictates how doctors are going to determine your possible incapacitation.
- What is springing power of attorney? LegalZoom. (n.d.). Retrieved June 3, 2022, from https://www.legalzoom.com/articles/what-is-springing-power-of-attorney
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