Springing Vs. Non-Springing Powers Of Attorney

If you do not have a Power of Attorney for Finance (“POA”) as a part of your estate plan when you become incapacitated, the results may be devastating. Your family will almost undoubtedly have to petition the court to establish a conservatorship to make financial decisions on your behalf (and medical decisions if you do not have an Advance Health Care Directive (“AHCD”).

With a POA, your family will likely be able to forgo petitioning the court. When executing a POA, you must decide whether the document will be “springing” or effective immediately (non-springing).

non-springing POA is effective immediately, and a springing POA takes effect when the individual who created the document (called the principal) becomes mentally incapacitated, comatose, or otherwise unable to act for himself or herself. Non-springing POAs offer several advantages. They allow your agent to act on your behalf for your convenience, not just when you are incapacitated. For example, you may want your agent to sign certain documents or handle affairs on your behalf when you are traveling abroad. Also, a non-springing POA avoids the necessity of determining whether you are incapacitated. This can result in delays in handling your affairs, disputes, or even litigation. In summary, a non-springing POA will allow your agent to act quickly in emergencies.

A potential disadvantage to a non-springing POA is the concern that your agent may be tempted to abuse his or her authority or commit fraud. Many proponents of non-springing POAs logically argue that the risk of fraud or abuse is even greater at the time you are incapacitated because you are unable to protect yourself. Thus, if you cannot trust your agent when you are incapacitated then that person should not be your agent. Married couples typically nominate themselves as each other’s primary agent in their POAs. In these cases, the secondary agent must show that the primary agent (spouse) has passed away or is incapacitated before the secondary agent can act. This adds a layer of protection against any concern the secondary agent will abuse his/her power.

Given the advantages of a non-springing POA, and the potential risks associated with a springing POA, it is usually preferable to sign a non-springing POA and to make sure the individuals you nominate as agents are those you truly trust. It is extremely important to prepare and execute a POA as soon as possible because you never know when you may need it, and because some financial institutions may not honor POAs that were executed several years earlier.

If you have any questions or concerns regarding estate planning, Advance Health Care Directives, or Powers of Attorney for Finance, please do not hesitate to contact the Law Offices of Tyler Q. Dahl for a free consultation.


DisclaimerThis material was prepared for general informational purposes only, and is not intended to create an attorney-client relationship and does not constitute legal advice. This material should not be used as a substitute for obtaining legal advice from an attorney licensed or authorized to practice in your jurisdiction. You should always consult a qualified attorney regarding any specific legal problem or matter.

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